Revised Viability Appraisal released

Fifth Capital have released their revised viability appraisal. You can download the full appraisal from this site or find it on the Council’s planning website.

A comparison with the April version is below. The revisions reflect a reduction in the number of residential units, an increase in the number of smaller residential units, an increase in the amount of commercial / community spaces.  The other design changes have not resulted in any significant change in the construction costs.

The essence of the appraisal is:

  • calculate the value of the completed development
  • subtract all the costs of development (including the cost of the land)
  • = the developer’s profit.

The alternative ‘residual land value’ approach is to calculate the value of the completed development, take away the costs (including the developer’s profit at a % of the development value) with the result being the value of the land.

April 2015 September 2015
Residential – units for sale 110 102
Average unit sale value £248,136 £247,438
1.Total residential sales £27,295,000 £25,238,659
Residential shared ownership 8 10
Average unit value £128,227 £105,213
2.Total value of shared ownership £1,025,820 £1,052,130
Annual income from residential ground rents £30,300 £28,200
Yield 6% 6%
3. Capital value of resi’ ground rents (a) £497,697 £463,203
Commercial rentable area (sq ft) 7,470 10,872
Rent psf £10.00 £10.00
Annual rent from commercial units £74,700 £108,720
Yield 8% 8%
4. Capital value of commercial rents (b) £898,501 £1,307,698
5. Gross Development Value (1+2+3+4) £29,717,018 £28,061,690
Site value £1,426,820 £1,353,953
Stamp duty & fees £82,756 £78,529
Construction area (sq ft) 112,235 105,797
Construction cost (c) £17,738,360 £17,306,114
CIL & S106 payments (d) £638,480 £587,000
Professional fees 10% £1,773,836 £1,730,611
Marketing & letting £438,660 £419,128
Sales fees £445,755 £420,925
Finance @ 7% £1,422,108 £1,394,942
6. Total Costs £23,966,775 £23,291,203
Profit (5-6) £5,750,243 £4,770,487
Profit on GDV 19.35% 17%

(a) Calculation includes Present Value @ 6% for 3 months

(b) Calculation includes Present Value @ 8% for 6 months

(c) April construction cost = £158.05psf. September construction cost = £163.63psf

(d) April retail space Community Infrastructure Levy (CIL) = £79,080. September appraisal does not show this budget line.  Council CIL charging schedule charges retail space at £120psm but B1,B2,B8 (i.e. office and light industrial) space at £0psm.

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