Glossary definition
Development Appraisal
A financial model that calculates the viability of a proposed development by comparing the gross development value against total project costs including land, construction, finance, fees, and a target profit margin. The residual method is the most common approach, working backwards from GDV to determine the maximum land value the scheme can support.
Definition
A financial model that calculates the viability of a proposed development by comparing the gross development value against total project costs including land, construction, finance, fees, and a target profit margin. The residual method is the most common approach, working backwards from GDV to determine the maximum land value the scheme can support. Lenders require a detailed development appraisal — often prepared using software such as Argus Developer — as part of every funding application, and will stress-test key assumptions including build costs, sales values, and programme.
See also
Closely related terms.
Gross Development Value
The total market value of a development upon completion, encompassing all units and any commercial elements.
Residual Land Value
The value of a development site calculated by taking the gross development value of the completed scheme and deducting all development costs including build costs, professional fees, finance costs, and developer profit.
Build Cost
The total cost of construction works on a development project, typically including materials, labour, preliminaries, and contractor margins.
Profit on Cost
A measure of development profitability calculated by dividing the projected profit by the total development costs and expressing it as a percentage.
Further reading
Guides that touch this term.
Guide
How Does Development Finance Work? A Complete Guide for UK Developers
A ground-up guide to how development finance is structured in the UK, covering loan mechanics, drawdown schedules, monitoring surveyors, and what lenders look for in your application.
5 min read readReadGuide
Development Finance Application Checklist: Documents You Need
A comprehensive checklist covering every document lenders require for a development finance application, from development appraisals to contractor tenders and planning evidence.
11 min read readReadGuide
RICS Red Book Valuations for Development: What Lenders Require
A comprehensive guide to RICS Red Book valuations in development finance, covering what lenders require, how valuations are structured, and how to ensure your scheme is accurately assessed.
11 min read readRead
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