Work out residual land value instantly with clear inputs, formula shown and shareable results.
Residual valuation works backwards: what remains for land after construction, fees, finance and the developer's required profit have been taken out of gross development value. Because profit is expressed on total cost including land, the calculation divides GDV by one plus the profit rate before deducting the non-land costs.
Residual land value
Land = GDV / (1 + profit on cost) - construction x (1 + fees and finance)
Land = GDV / (1 + profit on cost) - construction x (1 + fees and finance). Residual valuation works backwards: what remains for land after construction, fees, finance and the developer's required profit have been taken out of gross development value.
It is the difference between two large numbers. A five percent fall in GDV or rise in build cost can wipe out a quarter of the land value, which is why land is the riskiest part of a development.
This calculator takes 4 inputs: Gross development value, Construction cost, Target profit on cost, Fees and finance on build cost. The pre-filled defaults are a realistic worked example — replace them with your own site or project figures.