Gross development value

The Gross Development Value (GDV) of a development project is an estimate of the open market capital value or rental value the development is likely to have once it is complete. It may be calculated as part of an initial development appraisal and may then be continually assessed to help determine whether the project is likely to be, or has been profitable.

It is calculated based on the market conditions prevailing at the date of the valuation, and may be based on an analysis of recent property transactions for similar properties in the area of the development. This can include asking prices, sale prices, information provided by letting agents or estate agents, or assessments provided by development surveyors.

Gross Development Value may be used as part of a residual valuation, that is, the process of valuing land with development potential. The sum of money available for the purchase of land can be calculated from the value of the completed development (GDV) minus the costs of the development process (including profit). The complexity in such assessments lies in the calculation of inflation, finance terms, interest and cash flow against a programme timeframe.

For more information see: Residual valuation of land

Assessment of Gross Development Value can have a significant impact on the profitability, form, rate of completion, and even the viability of a development project. For example, if a high Gross Development Value is needed to generate sufficient profit for the development to be worth pursuing, it may be necessary to design a high density use for the proposed site.

Accurate assessment of Gross Development Value can be particularly difficult on large, complex projects that may take a considerable time to complete.

[edit] Related articles on Designing Buildings Wiki

• Base year.
• Compound Annual Growth Rate (CAGR).
• Contingency.
• Development appraisal.
• Discounted cash flow.
• Funding options.
• Funding prospectus.
• Investment.
• Property valuation.
• Residual value insurance.
• Site selection and acquisition.
• Site appraisal.
• Surveyor.
• Technical due diligence.
• Yield.

[edit] External references

• Valuation of development land, RICS, 2008.