FINANCIAL EVALUATION OF PROPERTY DEVELOPMENT PROJECTS. RESIDUAL VALUE METHOD
Pages: 681-689 Published: 23 Aug 2015
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Abstract: Risk is an inherent part of any investment and production process, which is why it must be clearly defined and assessed. In fact, property development is a process, which is under the effect of myriad influencing factors, and the analyst or appraiser, together with the developer, have the task to evaluate the degree of impact of each of these risks on the specific project. The main purpose of Residual Valuation Method is to separate the variables, whose value is unknown, from the others, whose value is known to us or we can determine it with sufficient certainty. Provided that we know the total value of the completed project, deducting from it the value of the known variables we will receive a residual value, which will represent the value of sought variables.