Residual Method

Question 1

What is the purpose of the residual method?

Answer 1

To find the market value of the site

Question 2

How do you find the GDV for an office/ retail/ industrial unit?

Answer 2

• Find the Market Rent and capitalise it by an All Risks Yield

Question 3

What is the Gross Development Value (GDV)?

Answer 3

Market value of a completed proposed development at today’s date/ date of valuation

Question 4

What’s included in the Total Development Costs? (TDC)

Answer 4

1. Site Preparation
2. Planning Costs
3. Building Costs
4. Professional Fees
5. Contingency
6. Marketing Costs & Fees

Question 5

What’s included in site preparation?

Answer 5

• Demolition
• Remediation Works
• Landfill Tax

Question 6

What’s included in planning costs?

Answer 6

• Town & Country Planning Act 1990 Section 106 payents