How To Calculate Market Value Using Residual Value Method?


Here is the 2 (two) formula

Residual Value x Present Value = Market Value 

GDV - ( GDC + Developer profit ) x Present Value = Market Value

 market value from this formula will reflect land value

 or 

 GDV - [ GDC + Land cost ] = Market Value

market value from this formula will reflect developer profit. 
DP is presented on %
ROI (%) = DP / GDV
ROC (%) = DP / GDC


acquisition price + acquisition cost = land cost
  1. stamp duty
  2. legal fees
  3. valuaiotn fees
  4. land surveyor
  5. estaet agent fees
  6. stamp duty on loan
  7. legal fees
 


How To Get Gross Development Value ( GDV )?  
comparison method = selling price x number of unit
investment method  = net income x year purchase in perpetuity
(for own occupation or renting purpose)

developable : undependable = 60% : 40% 

How To Get Gross Development Cost ( GDC )? 
Before we start the GDC calculation, we have to understand that there are 3 stage of construction & the GDC calculation is based on the 1st state which is pre construction state / cost before the principle construction. 

3 stage of construction
a) pre construction - 
  1. site survey, 
  2. feasibility study, 
  3. planning permission, 
  4. infrastructure, 
  5. conversion, 
  6. premium, 
  7. statutory contribution ( TNB, Telekom, Jabatan Parit & Saliran ), 
  8. site clearing, 
  9. earth work ( cut & filled to flat the land )

 b) principle construction - construction the building
  1. foundation to roof

 c)post construction - 
  1. commissioning - test the functioning of the building, building services,
  2. defect liability
before key handover or ccc. there are 7 department will come to inspect
tnb
bomba
telekom
syabas
building department from local autority
IWK
planning


Developer 's Profit ( DP )

15% -25% of GDV
or
20% - 30% of GDC

GDV- [GDC+ Land Cost] = Residual Value = ROI & ROC

ROI (%) = DP / GDV
ROC (%) = DP / GDC



Residual Value  
value land upon completion of development


Category of land use
1) Agriculture
2) Building
3) Industry

Building
residential - landed & strata
commercial
tourism
institutional


contruction
renovation
extention
refurbishment
conversion

all must have planning permission ( will tell you what you can do the you can get the GDV ) and development order ( surat ).

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