Evaluating development projects

Summary

Using a case study, it is shown that the competent assessment of real estate development projects entails the use of a broad range of skills and information input ranging from macro‐economic forecasting, assessment of inflation and interest rates; product design to ensure marketability, a review of competing projects and a command of techniques of financial appraisal. The analyses need to be keyed into a corporate framework which takes cognizance of the cost of capital, project specific risk, the management of working capital and an assessment of the effect a proposed project will have on corporate financial performance.

Keywords:

• Accounting
• cash flow analysis
• cost of capital
• development
• feasibility
• inflation
• risk analysis
• valuation

Notes

With the consent of the author and with the respective editors, this paper is also being published in the Journal of Valuation.