Property Development
Development process
Property Development tests the route from site identification to disposal: market and site appraisal, feasibility, site assembly, planning permission and building approval, design, procurement, construction, marketing and handover. Development control matters: zoning, plot coverage, setbacks, parking, environmental impact assessment for prescribed projects, and infrastructure obligations.
Residual appraisal
Land value = gross development value minus construction cost, professional fees, contingency, finance, marketing and legal costs, and developer's profit. State whether profit is a percentage of GDV or of cost; mixing the two is a common error. Finance must cover the construction period plus the marketing void. Test the result with sensitivity: a 10% fall in GDV or a six-month delay can wipe out the residual.
Worked example
Four flats with GDV ₦120m. Construction ₦60m; professional fees 10% of construction = ₦6m; contingency 5% = ₦3m; marketing and legal 3% of GDV = ₦3.6m; finance ₦8m; developer's profit 20% of GDV = ₦24m. Total deductions = ₦104.6m, so residual land value = ₦15.4m before acquisition costs. The reasoning: the developer's required profit is treated as a cost that must be met before any surplus is available for land.
Traps
Charging profit on cost while comparing with GDV; forgetting finance during the void; double counting professional fees already in the cost plan; ignoring planning conditions or infrastructure costs; presenting a residual as a certain value instead of a sensitivity range.