Development Appraisals Flashcards
What is the purpose of a development appraisal? (3)
A development appraisal is a tool to financially assess the viability of a development scheme, establish a residual site value or assess the profitability of a proposed scheme and its sensitivity to changing inputs/ assessing the viability of different uses, rents, yields or financial contributions (eg s106/CIL payments).
What is a development appraisal?
A calculation or series of calculations to establish the value/ viability/ profitability/ suitability of a proposed development based upon the clients inputs.
It can assume site value, or calculate a site value.
What is a residual site valuation
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What is the difference between a development appraisal and a residual valuation?
Simple Methodology of a Residual Valuation
Gross Development Value (GDV) - Total Development Costs (Including profit) = Residual Land Value
What is the Gross Development Value?
The aggregate market value of the proposed development, assessed on the special assumption that the development is complete on the date of valuation in the market conditions prevailing on that date.
What inputs make up the Total Development Costs?
Site Preparation
Planning Costs
Build Costs
Professional Fees
Contingency
Marketing Costs & Fees
Finance
Developer’s Profit
Types of costs that form site preparation
Demolition, remediation works, landfill tax, site clearance etc
How would you obtain site preparation costs?
Through a contractor’s cost plan
What are some examples of planning and statutory costs?
S106
Community infrastructure levy (CIL)
Affordable housing?
Other - provision of open spaces, playgrounds etc
S278
Planning applications & Building regulation fees
Cost of planning consultants
Cost of specialist reports required by the LPA
What is a Section 106 agreement and what act introduced it?
The Town and County Planning Act 1990 & it is a legal agreement for planning obligations to gain a planning consent. E.g. affordable housing, infrastructure costs, new schools etc.
What is a CIL?
What is a Section 278….?
Sources of Build costs?
Client Information
Spons Architects and Builders Price Book
Quantity Surveyor est/bill of quantities/cost plan
Building Surveyor Estimate
RICS Building Cost Information Service (BCIS)
Limitations of BCIS