Market Context & Risk

Question 1

What market conditions commonly influence viability?

Answer 1

• Rental growth prospects and yield movement.
• Inflation in labour and material costs.
• Availability of development finance.
• Market demand for completed units.

Question 2

What risks may arise during the construction phase?

Answer 2

• Cost escalation due to inflation or supply chain issues.
• Delays caused by weather, labour shortages, or design changes.
• Contractor insolvency or procurement issues.

Question 3

How do void assumptions impact an appraisal?

Answer 3

• Longer void periods increase holding costs and reduce profit.
• They influence the expected timing of income and disposal.
• Must align with local market absorption rates.