Development Land Valuation

The current market conditions and numerous physical factors affect the valuation of your land.

Most of these factors are summarised below. After deducting the impact of these factors from the gross market value (also called ‘greenfield value’), it gives you the net market value. This is the ‘actual value’ of your development site:

• Development land is usually valued by the Residual Method of Valuation. This is the value of the sales of the completed properties, less all the construction costs and the developer’s profits.
• Landowners sometimes take advice from ‘third parties’ who have heard that land sold for ‘such and such’ per acre. It is risky to value development opportunities by the comparison method – comparing the price of two similar parcels of land in similar locations – without knowing the abnormal costs on each site and also the variations in the location and market. In practice, there may be wide variations in land values.
• Planning conditions affect valuations, including: density of development; building heights; construction details; construction costs (eg zero carbon houses are expensive to build); affordable housing requirements.

Other factors that affect development site values are:

• Access and ransom strips.
• Levels.
• Drainage issues – is pumped foul drainage required? Is a particularly long site sewerage pipe required to service the development?
• Ground conditions.
• Overhead cables.
• The actual area that can be developed, as opposed to the total area of the site.
• The amount of landscaping required which reduces the net developable area.
• Length of access road leading into the land.
• Legal issues, including title restrictions. If title indemnity is required.
• Developers’ financial contributions required to help fund local schools, roads, landscaping and other infrastructure, as a result of the development eg CiL in England; Section 52 and Section 106 Agreements.

Contact us to discuss your development land valuation.