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    Residual Valuation

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    singiniwiz
    This document discusses residual valuation, which is a method for determining the value of a property with development potential. It involves estimating the gross development value of a completed project and subtracting all development costs to determine the amount available to pay for the land. This residual amount represents the maximum a developer could pay for the land while still achieving a specified profit level. The document provides examples of how to calculate development costs and profit for different types of residential, commercial, industrial and institutional projects.

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    Residual Valuation

    Uploaded by

    singiniwiz
    16 views8 pages
    This document discusses residual valuation, which is a method for determining the value of a property with development potential. It involves estimating the gross development value of a completed project and subtracting all development costs to determine the amount available to pay for the land. This residual amount represents the maximum a developer could pay for the land while still achieving a specified profit level. The document provides examples of how to calculate development costs and profit for different types of residential, commercial, industrial and institutional projects.

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    residual property valuation process

    Original Title

    RESIDUAL VALUATION

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    This document discusses residual valuation, which is a method for determining the value of a property with development potential. It involves estimating the gross development value of a completed project and subtracting all development costs to determine the amount available to pay for the land. This residual amount represents the maximum a developer could pay for the land while still achieving a specified profit level. The document provides examples of how to calculate development costs and profit for different types of residential, commercial, industrial and institutional projects.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    16 views8 pages

    Residual Valuation

    Uploaded by

    singiniwiz
    This document discusses residual valuation, which is a method for determining the value of a property with development potential. It involves estimating the gross development value of a completed project and subtracting all development costs to determine the amount available to pay for the land. This residual amount represents the maximum a developer could pay for the land while still achieving a specified profit level. The document provides examples of how to calculate development costs and profit for different types of residential, commercial, industrial and institutional projects.

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    RESIDUAL

    VALUATION
    M. E Phula (MSIM)
    RESIDUAL VALUATION
    • Drawing from lessons on Residual Theory of Land Value,
    the basis of calculation for a residual valuation is
    • Value of completed development-cost of carrying out
    the development(including profits) =the amount
    available for to pay for the land.
    RESIDUAL VALUATION
    • ‘A method of determining the value of a property which has potential
    for development, redevelopment or refurbishment’ (Parsons et al.
    2004: 220).
    • Effectively, it combines all three of the valuation approaches (Market,
    Income and Cost) as defined in the International Valuation Standards
    (International Valuation Standards Council 2013: 7).
    RESIDUAL VALUATION
    • It is used to calculate the site value where direct market comparable
    evidence is not available or as a check of its validity, and also by
    developers to ascertain the feasibility of a proposed scheme. That is,
    to establish what they can afford to pay for the land, which may
    produce a different figure to a market value on a comparable basis, or
    what potential profit may be achieved if the land is purchased at a
    specified price .
    To determine the value of development
    property
    • Establish what is the best (most valuable) use for the site, subject to
    full planning consent being forthcoming.
    • Estimate the current open market value for the completed
    development for this use.
    • Estimate what time lapse will be involved to complete the
    development.
    • Estimate the total costs of the development.
    The basic calculation
    • GDV (Gross Development Value)
    • Less all the costs of development, including:
    • Compensation to existing occupiers;
    • Planning and other statutory consents Charges;
    • Demolition, site clearance and site preparation;
    • Promotion and marketing costs;
    • Construction costs;
    • Architect, quantity surveyor and other construction professional fees;
    • Legal and estate agent fees on site purchase and final letting and/or sale;
    • Miscellaneous or contingency costs
    CONSTRUCTION COST ESTIMATES (APPROXIMATE)

    EFFECTIVE MAY 2022

    Residential Development Cost /m2 - Euro Cost /m2 - MK Cost /m2 - US$

    High density 245.68 236,625.00 288.84


    Medium density 396.63 382,000.00 466.30
    Low density 547.70 527,500.00 643.91

    Industrial Development

    Factory / Warehouse 377.81 363,875.00 444.17

    Office / Commercial Development


    Single storey 575.99 554,750.00 677.17
    Multi storey (Normal) 836.60 805,750.00 983.56
    Multi storey (With Cladding) 1,131.08 1,089,374.00 1,329.77
    Laboratory (duty free) 668.53 643,875.00 785.96

    Health / Hospital Development


    Single storey 800.78 771,250.00 941.45
    Multi storey 1,096.82 1,056,375.00 1,289.49

    Educational / School Development


    Primary School 407.53 392,500.00 479.12
    Secondary School 515.77 496,750.00 606.37
    Technical College 583.39 561,875.00 685.87
    University 878.78 846,375.00 1,033.15

    Fences Cost /m2 - Euro Cost /m1 - MK Cost /m1 - US$

    Wire fences 38.94 37,500.00 45.78


    Brick fences 103.96 100,125.00 122.22
    Concrete panel fences 173.78 167,375.00 204.31

    Cost /m2 - Euro Cost /m2 - MK Cost/m2 - US$

    Swimming Pool 953.73 918,562.50 1,121.27

    Forecourt 59.83 57,625.00 70.34


    (Reinforced concrete, mesh wire and sub base and
    laterite base)

    Cost /m2 - Euro Cost/Ha - MK Cost /Ha - US$

    Cost of Land (Low Density) 311,486.02 300,000,000.00 376,180.64

    NOTE:
    (1) The above figures are inclusive of External Works and Preliminaries.
    (2) Figures are DUTY PAID but excludes 16.5% Surtax.
    (3) Figure for Laboratory is DUTY FREE as indicated above.
    THANK YOU

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