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  • Development Appraisal - Example 1

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    IQC solutions
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    This document outlines the calculation of gross development value (GDV) and development costs for a real estate project. It first calculates the GDV as the net annual income of $1,400,000 multiplied by a yield percentage factor of 11.24859393, giving a GDV of $15,748,031.50. It then lists the construction costs, professional fees, financing costs, legal fees, developer's profit, and residual land value. It uses these figures to calculate the land acquisition cost, land financing costs over 2 years at 11% interest, and residual land value to equal the total development cost of $5,330,164.37.

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    This document outlines the calculation of gross development value (GDV) and development costs for a real estate project. It first calculates the GDV as the net annual income of $1,400,000 multiplied by a yield percentage factor of 11.24859393, giving a GDV of $15,748,031.50. It then lists the construction costs, professional fees, financing costs, legal fees, developer's profit, and residual land value. It uses these figures to calculate the land acquisition cost, land financing costs over 2 years at 11% interest, and residual land value to equal the total development cost of $5,330,164.37.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    6 views5 pages

    Development Appraisal - Example 1

    Uploaded by

    IQC solutions
    This document outlines the calculation of gross development value (GDV) and development costs for a real estate project. It first calculates the GDV as the net annual income of $1,400,000 multiplied by a yield percentage factor of 11.24859393, giving a GDV of $15,748,031.50. It then lists the construction costs, professional fees, financing costs, legal fees, developer's profit, and residual land value. It uses these figures to calculate the land acquisition cost, land financing costs over 2 years at 11% interest, and residual land value to equal the total development cost of $5,330,164.37.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 5

    Calculation of GDV

    Net annual income 1,400,000.00


    RoR 8.89%
    YP @perpetuity - 1/i 11.24859393

    GDV = NI x YP 15,748,031.50

    Development Costs

    Construction Cost
    GFA (m2) 10000
    Cost per GFA (Rs./m2) 680.00
    Construction Cost 6,800,000.00
    Construction period in months 18

    Professional Fees @ 16% 1,088,000.00

    Sub total I 7,888,000.00


    Finance
    Method 1:
    1/2 construction cost & full period 3,944,000.00
    Interest - 18months @ 8% 482,623.03

    Method 2:
    Full contract value & half period
    Interest - 18months @ 8% 468,698.21

    Sub total II 8,370,623.03

    Legal & agency fees and advertising costs (3% of GDV) 472,440.94

    Developer's Profit @10% of GDV 1,574,803.15

    Residual land costs (GDV - Total development cost including profit) 5,330,164.37

    Acquisition cost 4% of Land value A


    Finance for land ( 2 years @ 11%) B
    Land value C

    A + B + C = 5,330,164.37
    C=?
    A = .04C
    B = 1.04C * (1+.11)^2 - 1.04C
    C + 0.04C + [1.04C * (1+.11)^2 - 1.04C] = 5,330,164.37
    C - Residual Land Value 4,159,693.24

    Acquisition cost 4% 166,387.73

    4,326,080.97

    Finance cost for2 years @11% 1,004,083.39

    5,330,164.37

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