Development Appraisals Method and Process - 3 Part Series

1. 06/06/2024 - 09:30-11:00 (BST)
2. 13/06/2024 - 09:30-11:00 (BST)
3. 20/06/2024 - 09:30-11:00 (BST)

This course will develop individual’s ability to comprehend and consider development appraisals, identify the key drivers of value (and the risk associated), as well as prepare sensitivity analysis.  All are key points required to produce professional appraisals.

Development Appraisals are widely used by developers and valuers, but what are they, and what is included in them? This course is designed to answer these questions. The trainer will detail in what situation a development appraisal is suitable, what are the key inputs, what can a development appraisal tell the valuer, and what are the pitfalls of which to be aware. 

You will be introduced to the residual method of valuation, shown when it is used, and its components. The trainer will also explore developing cash flow residuals, multi-phase development appraisals and sensitivity analysis, and will consider the differences of valuing to land value or developer’s profit. 

Topics Covered

Part 1 - Background to development valuation and the Red Book 

• The approach to the valuation of development land 
• What Standards need to be complied with? 
• What is a valuation report? 
• What does a development valuation report need to cover? 
• Inspection and investigation considerations 

Part 2 - What is the Residual Method of Valuation? 

• What is the principle of this method? 
• The development programme 
• Gross Development Value 
• Costs of Development 
• Worked example  

Part 3 - Phased Developments and Sensitivity 

• Phased developments - how do we value these? 
• Cashflows - their use and features 
• S curve distribution 
• Sensitivity analysis

• Identify the key inputs and drivers of value.
• Determine when a development appraisal is appropriate and what information is required.
• Define the components of a residual valuation and when it is used.
• Appreciate what sensitivity analysis is, what it tells us, and its importance. 
• Identify pitfalls to be aware off, particularly when reporting to a lender, and when working on phased developments.