A Quick Guide: Development Land Valuations
Land can be a valuable commodity, especially if there is an interest in developing it into housing. There are a few best practice steps in preparing to value land for development that can help both land owners and developers maximise value and minimise risk.
Establishing The Facts
A Registered Valuer must become familiar with the characteristics of the development site in question and gain a solid knowledge of the development components. This will involve a physical inspection of the site and other appropriate research to reveal information such as:
- Identification of the extent of the site (frontage, width, depth, areas ready for development)
- Details of any existing buildings (number, size, etc) • Evidence of (or the potential for) site contamination
- Features of archaeological or historic significance
- The risk of flooding
- The availability and capacity of local infrastructure
The information available will change depending on the stage of the project at which the valuation is undertaken. So a review of the valuation might be needed later if more details become available.
The Two Valuation Methods:
Comparison Method
This method looks to analyse and compare the price against other sites with similar development characteristics such as location, size, and type of development. While this comparison may seem simple on paper, there are several factors to bear in mind that could affect the prices elsewhere. These might include:
- Values varying considerably within a small region
- The density of development between sites could differ
- The differing condition and type of the comparable sites (Greenfield vs. Brownfield, etc)
- Varying site infrastructure and construction requirements and costs
- Any planning obligations
- The sale date of the comparable price (especially pertinent in a changing marketplace)
Residual Method
