• Twitter
  • Facebook
  • LinkedIn
  • Mail
  • Call Me Back
  • About
  • Calculators
  • Contact
📞 Call us on 0330 223 42 52
Investment Property Partners
  • Home
  • Property Investment
    • Commercial Property
    • Buy to Let Property
    • Overseas Property
    • Student Property
    • UK Holiday Homes
    • Development Land
  • Services
    • Property Investment Advisory
    • Property Asset Management
    • Landlord & Tenant
    • Property Management
    • Property Training
  • Finance
    • Finance
      • Commercial Property Finance
      • Bridging Finance
      • Development Finance
      • Peer-to-Peer Lending
      • Buy to Let Mortgages
      • Investment Calculators
    • Insurance
      • Property Insurance
      • Commercial Property Insurance
      • Buy to Let Insurance
  • Training
    • Valuation & Performance
    • Law & Finance
    • Ownership & Diversification
  • Knowledge
    • Property Investment
    • Development & Construction
    • Finance, Valuation & Tax
    • Overseas Property
    • Landlord & Tenant
    • Property Law & Compliance
    • Investment Calculators
  • Search
  • Menu Menu
You are here: Home1 / Development & Construction2 / Gross Development Value (GDV) – Property Developers Guide to Financial...
Gross development value

Gross Development Value (GDV) – Property Developers Guide to Financial Appraisals

Gross development value, or GDV as it is commonly known in property circles, is an important valuation metric that all investors and property developers need to be familiar with when building their project and financial appraisals. The gross development value of a property investment project can be calculated to give a near accurate figure of what that property or real estate development project may be worth on the open market once all development works have been completed.

Gross development value is an essential tool for any real estate investor or property developer as it forms a key component in the development appraisal process.

Without an accurate gross development value any pre-acquisition or pre-development financial projections may be seriously flawed and the property developers risks increased significantly.

What is Gross Development Value (GDV)?

To many property developers, GDV is one of the most important performance metrics that they will monitor throughout the course of a project as it helps to highlight the capital and rental value of their property or development project when all redevelopment works have been completed.

In other words, it will show if a profit has been, or will be made from the development project, and at what level.

Gross development value should never be underestimated, it is the foundation to any property development appraisal and is the one performance metric that impacts on all other major aspects of the evaluation.

Put simply, gross development value is the estimated value that a property or new development would fetch on the open market if it were to be sold in the current economic climate.

How to Calculate Gross Development Value

So, how is GDV calculated?

Generally, if a near accurate valuation is to be created for a property development project or purchase, then current property sales prices and recent transactions in the area for similar properties would be carefully analysed – this would provide a comparable estimate of what properties in the same area are selling for and therefore what you could expect your property to fetch.

Developing to Let & Rental Values

For some property developers however, sales prices aren’t the biggest concern.

Instead, establishing rental values and recent local lettings of similar properties will be of primary interest.

This is because on completion of their project they may want to let the property to tenants either on a residential or commercial basis.

If a developer wants to let a property or development, they will have to look at recent lettings in the same area to find comparable rental values.

This information can usually be obtained from local lettings agents or specialist firms of valuation surveyors.

This will help to establish how much the developer can expect to take in rent on a per month, per annum etc. basis.

Gross Development Value… a Key Performance Metric

As a calculation, the gross development value should never be underestimated.

It is the foundation to any property development project appraisal and is the one performance metric that impacts on all other major aspects, such as the acquisition cost of development site, the cost of the construction and enabling works; developers profit; and, more importantly, the likelihood of a successful financial outcome.

Residual Method of Appraisal

The method of development appraisal that incorporates the GDV calculation is the residual method of valuation and you can approach this in a couple of different ways.

The most common and most basic formula to estimate the general value is as follows:

Land = GDV – (Construction + Fees + Profit)

 

Where:

Land = Purchase price of land/property/site acquisition

GDV = Gross development value

Construction = Building and construction costs

Fees = Fees and transaction costs

Profit = Developers profit required

Calculating Property Developers Profit

An alternative form of the residual assessment can be used by reconfiguring the above formula to calculate the property developers profit:

Profit = GDV – (Construction + Fees + Land)

 

The second form of this formula is a more traditional way of assessing the financial viability of a property development project as it helps to highlight the developers profit so an assessment can be made at the outset as to the projects viability.

Specialist Property Investment & Development Finance Solutions

As a leading independent property investment specialists Investment Property Partners offer expert advice and support to clients across our specialist areas of expertise helping them to achieve their investment objectives.

If you are searching for land, development sites or property finance solutions please contact us today to discuss how Investment Property Partners can help you.

Contact Us Today

Further reading…

More information about property and land development… here 

Tags: GDV, Gross Development Value, Property development, Property finance
Share this entry
  • Share on Facebook
  • Share on Twitter
  • Share on WhatsApp
  • Share on Pinterest
  • Share on LinkedIn
  • Share on Tumblr
  • Share on Reddit
You might also like
Commercial property investment All About Chartered Surveyors
Residual method of valuation Residual Method of Valuation for Land, Property & Development Appraisals
Financial leverage and gearing in property investment Financial Leverage, Gearing & Property Investment – Property Investors Guide
Contractors method of valuation Contractors Method of Valuation for Commercial Property
SIPP commercial property investment SIPP Commercial Property Investment & Pensions Guide
Section 106 agreements and planning obligation for property developers Section 106 Agreements & Planning Obligation – Guide for Property Developers
Parry's valuation and investment tables Parry’s Valuation & Investment Tables for Property Investment Appraisals & Valuations
Capital gains tax property disposals Capital Gains Tax on Property Disposals – Guide for Property Investors

Search…

Property Knowledge

  • Property Knowledge
  • Property Investment
  • Development & Construction
  • Overseas Property
  • Finance, Valuation & Tax
  • Landlord & Tenant
  • Property Law & Compliance
  • Investment Calculators

REVIEWS

4.8
Rated 4.8 out of 5
4.8 out of 5 stars (based on 13 reviews)
Read our reviews

What’s New

  • Customer Reviews for Investment Property Partners

    Customer Reviews for Investment Property Partners
  • Commercial Property Investment – Guide to Investing in UK Commercial Properties

    Commercial Property Investment – Guide to Investing in UK Commercial Properties

    If you are a property investor considering commercial property …
  • Manchester Property Investment – Buying Investment Property in Manchester

    Manchester Property Investment – Buying Investment Property in Manchester

  • Property for Sale

    Property for Sale

    Search for investment property for sale in the UK, …
  • Buying Land for Development or Investment

    Buying Land for Development or Investment

    With a saturated UK housing market, it is hardly …
  • Parry’s Valuation & Investment Tables for Property Investment Appraisals & Valuations

    Parry’s Valuation & Investment Tables for Property Investment Appraisals & Valuations

    Richard Parry’s Valuation and Investment Tables were first published …

Popular posts…

  • Gross development value Gross Development Value (GDV) – Property Developers Guide to Financial Appraisals
    Gross development value, or GDV as it is commonly known...
  • Parry's valuation and investment tables Parry’s Valuation & Investment Tables for Property Investment Appraisals & Valuations
    Richard Parry’s Valuation and Investment Tables were fi...
  • Property yield, calculating yields and return on investment Property Yield – Calculating Property Yields & Return on Investment (ROI)
    For property investors the intelligent analysis of the...
  • Residual method of valuation Residual Method of Valuation for Land, Property & Development Appraisals
    In property development circles the residual method of...
  • Commercial property valuation using the profits method Commercial Property Valuation Using the Profits Method
    The profits method of property valuation is typically a...
  • Freehold property, leasehold property and commonhold property Freehold Property, Leasehold & Commonhold Property
    It is very important that property investors, landlords...

Investment Property

Investment Property Partners is a world leading independent real estate and property investment specialist focused on delivering exciting income and capital growth opportunities to private individuals, wealth management specialists, corporate and institutional property investors.

Our expert property investment advisory services are delivered to clients throughout the United Kingdom, Europe and internationally. Combining unparalleled experience, comprehensive capabilities, in-depth research and access to extensive market networks, the experts at Investment Property Partners have the experience and expertise to help you.

Expert In…

  • Property Investment
  • Investment Advisory
  • Property Services
  • Property Finance
  • Property Insurance
  • Property Training
  • Property for Sale

What’s New…

  • Customer Reviews for Investment Property Partners

    Customer Reviews for Investment Property Partners
  • Commercial Property Investment – Guide to Investing in UK Commercial Properties

    Commercial Property Investment – Guide to Investing in UK Commercial Properties

    If you are a property investor considering commercial property investment …
  • Manchester Property Investment – Buying Investment Property in Manchester

    Manchester Property Investment – Buying Investment Property in Manchester

  • Property for Sale

    Property for Sale

    Search for investment property for sale in the UK, Europe …

London

1 Berkeley Street
Mayfair
London W1J 8DJ
0330 223 42 52
[email protected]

Manchester

Pall Mall
61 – 67 King Street
Manchester M2 4PD
0330 223 42 52
[email protected]

GET SOCIAL

Connect with us...

Twitter   Facebook   Google+   LinkedIn

© Copyright 2021 - Investment Property Partners
  • Twitter
  • Facebook
  • LinkedIn
  • Mail
  • Home
  • About
  • Careers
  • Environment
  • Privacy
  • Terms
  • Reviews
  • Sitemap
Buying Land for Development or InvestmentBuying land for developmentManchester property investmentManchester Property Investment – Buying Investment Property in Manche...
Scroll to top

This site uses cookies. By continuing to browse the site, you are agreeing to our use of cookies.

Learn moreOK

Cookie and Privacy Settings



How we use cookies

We may request cookies to be set on your device. We use cookies to let us know when you visit our websites, how you interact with us, to enrich your user experience, and to customize your relationship with our website.

Click on the different category headings to find out more. You can also change some of your preferences. Note that blocking some types of cookies may impact your experience on our websites and the services we are able to offer.

Essential Website Cookies

These cookies are strictly necessary to provide you with services available through our website and to use some of its features.

Because these cookies are strictly necessary to deliver the website, refusing them will have impact how our site functions. You always can block or delete cookies by changing your browser settings and force blocking all cookies on this website. But this will always prompt you to accept/refuse cookies when revisiting our site.

We fully respect if you want to refuse cookies but to avoid asking you again and again kindly allow us to store a cookie for that. You are free to opt out any time or opt in for other cookies to get a better experience. If you refuse cookies we will remove all set cookies in our domain.

We provide you with a list of stored cookies on your computer in our domain so you can check what we stored. Due to security reasons we are not able to show or modify cookies from other domains. You can check these in your browser security settings.

Google Analytics Cookies

These cookies collect information that is used either in aggregate form to help us understand how our website is being used or how effective our marketing campaigns are, or to help us customize our website and application for you in order to enhance your experience.

If you do not want that we track your visit to our site you can disable tracking in your browser here:

Other external services

We also use different external services like Google Webfonts, Google Maps, and external Video providers. Since these providers may collect personal data like your IP address we allow you to block them here. Please be aware that this might heavily reduce the functionality and appearance of our site. Changes will take effect once you reload the page.

Google Webfont Settings:

Google Map Settings:

Google reCaptcha Settings:

Vimeo and Youtube video embeds:

Other cookies

The following cookies are also needed - You can choose if you want to allow them:

Accept settingsHide notification only