Development Appraisals - L1

Question 1

What is the difference between a Residual Appraisal and a Development Appraisal?

Answer 1

1) Residual Valuation is Red Book compliant and a development appraisal is not

2) Residual Valuation looking at site value and the profit on cost is an input

3) Development appraisal the land price is an input and the profit on cost is an output

Question 2

Please can you give me an example of how you comply with RICS Professional Standard on Valuation of Development Property (October 2019)?

Answer 2

Undertaking sensitivity analysis

Question 3

What are the limitations of Argus Developer?

Answer 3

It is very sensitive to inputs
Based off a lot of assumptions so won’t be 100% accurate
Assumes 100% debt finance

Question 4

What is a development appraisal?

Answer 4

Tool to financially assess the viability of a development scheme

Question 5

What is a residual valuation?

Answer 5

A specific valuation of a property holding to find the market value of the site based on market inputs