Understanding and mitigating development risk

Assessing whether a real estate project will be financially viable and worthwhile is one of the most important investment decisions, understanding the underlying risks is essential and must be done prior to any capital expense.

Development appraisals are an important analytical tool that allows potential developers to understand the financial and project risk that they may face. They are aimed at landowners who wish to accurately asses the potential residual value of their land, developers who wish to estimate potential profits of a development projects or even private and institutional investors wishing to ascertain the financial viability of a project.

The development appraisal can be adjusted to represent different shares of debt and equity financing, as well as financing rates. It shows the critical points in the project in terms of cash flow, as well as the ultimate financial viability of the project. In addition, the sensitivity analysis allows you to see which of the variable in costs, duration and revenues are most critical to the success of the project, allowing you to plan ahead to mitigate risk. This structured tool incorporates elements, using either your own financial assumptions, or cost and income projections drawn from our own database.