What Is GDV – Gross Development Value and how it works…. 

In the property development sector, gross development value is a term that developers and investors consistently use when discussing valuation metrics. The GDV of any given property can be arrived at with a simple formula, giving a reasonably reliable idea of how much a property development endeavour might be worth in the future.

In fact, with in-depth insights and industry-leading expertise at your disposal, you can draw up a surprisingly accurate projection of the future open market value of your investment, provided all the objectives laid out in your project development plan.

GDV is used as a key metric when it comes to the development appraisal process. It has huge implications for financial projections for both the pre-acquisition and pre-development phases of your project. If your GDV has been miscalculated with even only a slight error, those important projections can be seriously skewed and project developers are working with a ticking time bomb of a high-risk investment.

Keep an eye on the profit potential of your investment

For those working within the property development sector, the GDV is arguably one of the most important metrics they turn to for assessing the overall capital and rental potential of properties in their portfolio. As previously mentioned, it can also be used to provide a realistic figure for what properties currently in redevelopment might command on the open market. If all the associated data has been correctly collected and applied and the GDV has been correctly calculated, both overall capital and rental projections are easily accessible, underlining the profit potential of a development project.

Calculating GDR

If you’re looking to achieve as accurate a property valuation as possible, the current economic climate needs to be taken into account. More specifically, consider the more immediate region your property lies in, with current asking prices of properties and data from recently completed transactions of comparable commercial properties an essential reference for the assessment. Once you’ve got gathered references for similar properties in the area, you’ll need to delve into the detail of each property, uncovering what elements command premiums and what shortfalls are holding back the least expensive properties.

Looking to become a commercial property landlord?

There are an increasing number of developers looking to let completed properties. In many cases, commercial rentals can be surprisingly lucrative, especially if the finished premise is delivers a much needed solution for businesses in the local area where adequate alternatives are thin on the ground. Before you secure a commercial property for development as a rental space, make sure you carry out a detailed competitor analysis of other commercials in the area. See what kind of building spec is on offer and whether your own building is up for the task against the competition. You may want to bring in the advice of experts at this point, with seasoned surveyors providing you with the specialist valuation you need to ensure your commercial property will withstand the competition on the local market and ideally, project you a profit. You should then be able to break down how much of a rental income a commercial property will generate each month, week or year.

Using GDR to garner real cost of investment

It might seem relatively simple, but gross development value is an incredibly useful metric that has been specially selected for its association with all manner of other development areas. This cornerstone component of a development project accrues all manner of added costs, including the purchasing of buildings or land plots themselves, not to mention the hiring of construction teams to carry out any advanced building and expansion on site. You can also see how much a developer can look to enjoy as a fee for their work after essential costs have been removed from the overall financial outcome.

Using the Residual Method of Appraisal

When it comes to GDV metric, the residual method of development appraisal is used. There are two key approaches here.

The first approach sees you subtract the combined cost of construction and building, fees and transactions, plus the overall developer profit needed from the gross development value. The resulting value corresponds with the purchase price of land or property acquisition.

An alternative approach assesses the profit of the property. Here, you subtract construction and building costs, fees and transaction amounts, plus land costs from the GDV. The resulting number then corresponds to the required property developer profit. For property developers, this is the go-to formula. Not only does it demonstrate a clear oversight of viability of a project, it offers them a personal projection on what kind of income they can look forward to after a development project has been completed successfully.

Get in touch for expert advice

If you’re looking to capitalise on the UK commercial property market, it pays to speak to the experts to discuss potential prospects and pitfalls. We’ll help break down the needs of your business, aid you through competitive analysis and toward the ultimate purchase itself.
Get in touch today on and we’d be happy to help.

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Share on pinterest
Share on email

CONTACT US

LATEST DEALS

Don’t miss out on our opportunities

Advanced Search

Try Selecting Multiple Options to search

Recent Articles:

invest in commercial property

How to Invest in Commercial Property – The Ultimate Guide

The residential property sector has always dominated the UK property market. However, while many people have historically strived realise their …

Read More
Selling Commercial Property – Tax Implications

Selling Commercial Property – Tax Implications

Over the course of the last 15 years, the tax receipts associated with the sale of commercial property have risen …

Read More
How to Sell Commercial Property with Tenants

How to Sell Commercial Property with Tenants

When looking to sell a commercial property, landlords will often find themselves in a very fortunate position. All they need …

Read More

Current Opportunities

Proper Asset Management
Call for price

Vacant Pub, Hayes, Greater London

The Angel, 697 Uxbridge Road, Hayes, Middlesex, UB8 8HX
Call for price

9Round Fitness, Seven Sisters, Greater London

Unit A Birdsmouth Court Bathurst Square Seven Sisters N15 4FW
Proper Asset Management
Call for price

Aurora House, Office, Milton Keynes

AURORA HOUSE , DELTIC AVENUE, MILTON KEYNES MK13 8LW
Call for price

Vacant Bank, Leyland

Prest, 165-167 Towngate, Leyland, Preston, PR25 2TE
Proper Asset Management
Call for price

Car Wash with Development Potential, Feltham, Greater London

Spring Corner, High Street Feltham, TW13 4PA
Call for price

Barclays, Sunbury, Greater London

59 Staines Road West Sunbury TW16 7AG
Call for price

Hair Salon, Stanmore, Greater London

10 Buckingham Parade, The Broadway, Stanmore, HA7 4EB
Call for price

Ladbrokes, Stanmore, Greater London

8 Buckingham Parade, The Broadway, Stanmore, HA7 4EB
Call for price

Pharmacy, Stanmore, Greater London

5 Buckingham Parade, The Broadway, Stanmore, HA7 4EB
Current Opportunity
£ 450,000

Specsavers, March

3-5 Broad Street, March,Cambridgeshire, PE15 8TP

The Home of the Blue-Chip Investor

Click the logos below to see relevant investment properties