Real Estate Development: Appraisal and Analysis
Real Estate Development Modelling Project
A speculative developer is offered the opportunity to build science park offices in the car park opposite to the student union building at the University of Reading. The offices will be occupied by spin-off companies from University research and innovation projects. The site has planning permission for the development for 10,000 sq m of office space.
The project development timeline is as follows:
?? Pre-construction: 6 months
?? Construction: 18 months
?? Developer requires an Internal Rate of Return of 20% per annum
You should present a brief report outlining the key assumptions and the outcomes from the appraisal modelling task. Particularly you are encouraged to include:
?? Determine the size, and relevant office parameters, e..g number of offices, size etc
?? Estimate the development costs for the project
?? Estimate the planning, professional fees and any additional costs
?? Estimate the Revenue, expenses, and NOI for the property
?? Estimate stabilized Vacancy Rate
?? Estimate how much and when the construction cost will be paid out
?? Compute all the necessary appraisal indicators, e.g., NPV
1. You are to outline the key assumptions.
2. You are to analyse the outcome from the appraisal.
3. You are to comment on the level of uncertainty on the appraisal outcomes and on
the amount of subjectivity in developing key assumptions.
Word limit: 1500 words (Note: tables and charts are not included in the word count.)