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    Real estate / Development

    Development Feasibility

    The residual land value of a development: what is left for the site after build cost, fees and the developer’s profit, once the completed value is known.

    Residual land value$6,260,000Total cost$25,740,000Developer profit$8,000,000
    Residual land value
    $6,260,000
    What the site can bear
    Total cost
    $25,740,000
    Build, fees and contingency
    Developer profit
    $8,000,000
    20% of GDV
    Profit on cost
    31.1%
    The other way to measure it
    Residual appraisal
    Residual land value = GDV − build cost − fees − profit.
    Residual appraisal
    LineValue
    GDV$40,000,000
    Build cost$22,000,000
    Fees$2,640,000
    Contingency$1,100,000
    Profit$8,000,000
    Inspect the model
    Choose a quick result view, a scaled comparison, or the complete diagnostic set.
    Residual land value against build cost
    Every million of build cost comes straight off the land value.
    Residual land value against build cost-10.35-4.830.6916.2111.7417.2615152020252530303535Development Feasibility
    Canonical equations
    The exact relationships implemented by this engine.

    GDV − build − fees − contingency − profit · The land value.

    profit / total cost · The developer’s return.

    finance methodology

    A clear path from inputs to results.

    The residual land value of a development: what is left for the site after build cost, fees and the developer’s profit, once the completed value is known.

    Step-by-step methodWorked exampleAssumptions explained

    How to use

    1. Set gross development value ($m).
    2. Set build cost ($m).
    3. Set professional fees (% of build).
    4. Set contingency (% of build).
    5. Read the headline metrics, then check the table for the detail.

    The formula

    GDV−build−fees−contingency−profitGDV − build − fees − contingency − profit

    Reference: Residual land value after build cost, fees and profit (Appraisal Institute, The Appraisal of Real Estate).

    Worked example

    At the default inputs

    Inputs
    • Gross development value ($M): 40; Build cost ($M): 22; Professional fees (% of build): 12; Contingency (% of build): 5; Developer profit (% of GDV): 20
    Calculation path
    1. 1

      Residual land value: $6,260,000 · Total cost: $25,740,000 · Developer profit: $8,000,000 · Profit on cost: 31.1%

    Result

    Residual land value: $6,260,000 · Total cost: $25,740,000 · Developer profit: $8,000,000

    Interpreting the result

    A $40,000,000 scheme costing $22,000,000 to build leaves $6,260,000 for the land.

    Assumptions & limitations

    • Single-phase development.
    • Finance costs excluded.

    Frequently asked questions

    What is residual land value?

    What is left for the site once everything else is paid, including the developer’s profit.

    Should finance costs be included?

    Yes, in a full appraisal; they reduce the residual.

    Methodology last reviewed 2026-10-22. Results are informational and not financial or engineering advice — see our disclaimer.