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.

Fifth Capital scheme is over valued

Analysis of the values put on their flats compared to local comparables show that Fifth Capital may have seriously over valued their scheme, to the point that it is not viable.

In their Viability Report, Fifth Capital follow standard procedure by calculating  the value of their flats by comparing them with others on the local market; ‘comparable valuation’. But just how comparable to Stokes Croft are these properties?  (Note that Fifth Capital’s one bed flats will be 500-600 sq ft)

finzelsreachFinzels Reach

Dockside development on the old Courage brewery site. “The height of contemporary living” with “views overlooking the Floating Harbour and Castle Park”. 1 bed flats for c.£175,000 – £225,000.

horizonandeclipseHorizon and Eclipse

In the towerblock at Cabot Circus above Harvey Nicks. “Some of the most desirable flats in Bristol city centre” 1 bed flats for £177,000 to £199,000.


“The location of these new apartments in Bristol is as stunning as the building, facing the Millennium Promenade and overlooking the Floating Harbour and Porto Quay.” 1 bed apartments for £160,000 to £190,000.

The Viability Report accepts that all of these are far superior to the Carriageworks site. So they also consider some properties in the local area for better comparables. Of those, five are one bed flats.

armidaleArmidale Place

Redevelopment of the old White Tree Garage site.  They quote a 1 bed flat (657 sq ft) for £227,000.  But look at Rightmove and you’ll see most go for £138,000 to £150,000 (485 sq ft). And that’s with secure basement parking.

pictonstreetPicton Street

Flat 1 at Number 50. Cited as a one bed flat at £217,500 but check Zoopla and it describes it as a 2 bed flat. Oops.  Rightmove shows 47a, a genuine one bed flat, for £136,000.


The other three one bed flats listed are up in Kingsdown or Cotham where you obviously get a bit of a premium over grungy living at bottom of hill.

The Council’s assessment of the viability appraisal

As is normal practice the Council asked their own consultants, in this case BNP Parisbas, to assess the validity of the viability appraisal.  They thought that the best comparable is other new build (the newness, the hype of a new development and the substantial marketing budget will always give a boost to values). Consequently they could expect Armidale Place to have lower values than a new build.  They only found one comparable new build.

prospectcourtProspect Court, Kingsdown

“Prospect Court is a stylish purpose built development of just nine, 2 and 3 bedroom, apartments arranged over three floors designed to blend with the existing period properties. Located in a prime elevated position”.  There are no one bed flats but two beds (c720 sq ft) have sold for c.£245,000 (Fifth Capital’s are being valued at £250,000).  But this is a small quite exclusive development and, as the sales blurb says, it’s up the hill!

catherinecourtCatherine Court, Picton St

We’ll throw this one into the pot as it’s just across the road.  Built in the 1990s, it’s a gated community with parking. Units are being sold for £205,000 (2 bed flat with courtyard parking) to £265,000 (house with internal garage).

In conclusion

So, in light of the comparable evidence, it is a bit surprising that Fifth Capital conclude (and BNP Parisbas confirm) that their one bed flats will be worth £215,000 (students of Estate Management and Valuation would probably be marked down for failing to take proper account of the comparables!).

If the value was put at £150,000 (still outrageous, but there you are) it would result in a reduction in the total sale values of the 59 one bed flats of £3.8m.  A similar reduction for the two and three bed units (we haven’t the time to do that analysis but we’d guess they may also be over valued) would wipe out all profit on the scheme and, we suspect, make it a non-starter.  That doesn’t help a case for more affordable housing, but it does suggest that something else is going on in the figures that is not fully disclosed in the viability report.