The most common approach to valuing land for a development is known as the Residual Valuation method. This is essentially the estimated realisation less the development costs. Although it may sound simple, complexity arises when inflation, finance and cashflow variables are considered over time.
A better approach is often to consider the Internal Rate of Return (IRR) for a development project. This is generally a more appropriate metric for assessing capital investments, which property development is.
To get started with calculating IRR you need to know the expected realisation and costs for your land development project.
Infill is a service that can help you find the right professionals to develop a proposal and accurately estimate the realisation, cost and programme. Once this information is compiled, calculating the IRR will be a piece of cake.
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