A developer in Queensland is considering purchasing a site for a residential subdivision. A valuer using the residual (hypothetical development) method would calculate the site's value by:
Correct Answer
B) Estimating the gross realisation of the completed development, then deducting all development costs, profit margin, and holding costs
The residual (hypothetical development) method works backwards from the expected gross realisation of the completed project, deducting all development costs (construction, professional fees, finance, marketing), the developer's profit margin, and holding costs to arrive at the residual land value.
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