【正文】 61,000 Total development costs 163。910,407 x [1/(1 + )2] = 163。25,000 Q5 Q4 Q2 Q1 Q0 Q6 Interest on building costs is cumulative 24 603 617 6,110 17,816 47,421 59,521 66,434 68,036 TOTAL = 163。2,083,000 x = 163。Development appraisal Residual Method Residual Method Value of pleted development Development (construction, fees, finance, etc.) costs Developer’s profit (. % costs or % value) = Residual land value ? Equation can be rearranged to estimate profit once land cost is known (. from valuation to appraisal) ? Land prices per hectare of similar sites that have recently been sold provide a useful check ? The residual valuation of a development site usually begins broadly at the evaluation stage and is gradually finetuned before the site acquisition and construction phases 3 Residual land valuation: simple example ? Development opportunity for 5,000m2 offices that it is estimated will let for 163。267,540 16 Cost Inputs Ancillary costs Might include planning fees, building regulation fees, insurance and other incidental costs Contingency = (bldg costs + other costs + ancillaries + fees) x 3% = (163。265,956 Interest is not paid on the full amount over the entire building period. The sshaped buildup of costs is simplified to a straight line and an approximation is obtained by calculating the annual interest on half of the costs over the construction period How interest is calculated Over construction period: = (163。752,403 Acquisition costs** Site value = residual balance / (1 + ) = 163。3,827,536 Developer39。 Sale Fees: 163。182,081 Land Value output Interest on site costs* = 163。227,171 163。E) ? Legal ? Consultants (planning, highways, ecology, archaeology) ? Developer / project management ? Landscape architect Professional fees = (building costs + other works) x 13% = 163。130/m2 and sell at an initial yield of 8% ? Construction costs are estimated to be 163。1,938,000 + 163。2,622,944 / 2) x [(1 + )] = 163。752,403 / = 163。s profit on pletion* 163。391,189 Letting amp。1,092,489 – (1,092,489 / ) = 163。454,341 163。1,938,000 Cost Inputs Professional fees ? Architect ? QS ? Engineers (structural, Mamp。800/m2 and the development will take, after a leadin period of years, years to plete, plus a void of years ? The developer is seeking a minimum return on development value of 20% ? What is the value of the site? 4 Simple residual land valuation Development value (DV): Total constructed area (m2) 5,000 Estimated market rent (163。120,000 + 163。165,934 25 Interest on half construction costs over construction period For void period, interest is on all construction costs and interest rolled up so far 6 months 15 months 3 months 163。711,492 Maximum amount that should be paid for the site if the proposed development was to proceed and all of the valuation assumptions held true *If site was purchased at the s