Development Appraisals - L3

Question 1

(Swindon) What advice did you give in this appraisal and why?

Answer 1

Other industrial units let on a GEA basis rather than GIA, adopted GEA to rentalise more space and have higher rental income.

Advised that the scheme would be viable because it met the developer’s target profit on cost.

Question 2

(Swindon) You used BCIS to determine the build costs, what are some of the limitations of using BCIS?

Answer 2

They used samples which are all medians and averages therefore it isn’t that accurate, this is why we cross check with the Building Surveying team.

Question 3

(Moorgate) How did you reflect that the scheme had planning permission in your appraisal?

Answer 3

I lowered the contingency costs to reflect this.

Question 4

(Moorgate) How did you determine the appropriate finance rate?

Answer 4

I used a margin above base and I adopted 9%

Question 5

(Moorgate) Are there any other ways which you could have determined the finance rate?

Answer 5

1) Base Rate and make adjustments
2) Client provides finance rate
3) Using the S Curve
4) The current SONIA rate (Sterling overnight index average)

Question 6

(Moorgate) You noted here that if the Market Rent decreased by 10% that the scheme would become unviable. What advice did you give in relation to this?

Answer 6

1) Intensifying the scheme (reduce size of communal areas)
2) Reducing build costs

Question 7

(Moorgate) What profit on cost were they targeting?

Answer 7

15%