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Need to calculate the land value online? This website offers the possibility to calculate the land value by using the residual capitalization appraisal technique. More...

Land value calculation

This page offers the possibility to calculate the land value by using the residual capitalization appraisal technique. Enter the data below and get an overview of the present values of all cashflows, including the land value. The land value takes into account the land value at the moment of sale. The land value is assumed to rise on a yearly basis. The value of the real estate on it is expected to depreciate linear, but is corrected for the yearly rise in prices.

As an example the following data is entered for a real estate object that is to be developed:

The gross floor area equals 5.000 m²;
The construction costs equal € 1.000,- per square meter gross floor area (price of t=0, to be paid at t=0);
The overhead equals 25% of the construction costs (to be paid at t=0);
The developer's fee equals 10% of the sum of construction costs and overhead (to be paid at t=0);
The yearly rent equals € 150,- per square meter lettable floorspace (price of t=1, first payment at t=1);
The ratio between the lettable and gross floorspace equals 90%;
The rent rises 3% per year;
The vacancy loss is estimated at 10% of the revenues of the first year and 5% of the revenues of the second year;
The loss due to friction (tenants moving in and out) is estimated at 3% of the (yearly) revenues (first payment at t=1);
The maintenance costs are estimated at 0,5% of the sum of construction costs and overhead (first payment at t=1);
It is estimated that in the 10th and 15th year renovations should be carried out costing 5% en 10% of the sum of construction costs and overhead;
The maintenance costs are expected to rise 3,5% per year;
Other operating expenses are estimated at 4% of the yearly revenues (first payment at t=1);
The landvalue is expected to rise 4% per year;
The value of the real estate object is expected to rise 3% per year;
The depreciation period equals 50 years;
The exploitation period equals 20 years;
The required rate of return equals 8%.

Variable	Value	Remarks
Gross floor area [m²]		The gross floor area in square meters.
Construction costs [€/m²]		The construction costs equal € 1.000,- per square meter gross floor area (price of t=0, to be paid at t=0)
Overhead [%]		The overhead as a percentage of the construction costs (to be paid at t=0)
Developer's fee [%]		The developer's fee as a percentage of the sum of construction costs and overhead (to be paid at t=0)
Rent [€/m²/jr]		The yearly rent per square meter lettable floorspace (price of t=1, first payment at t=1)
Ratio lettable gross/floorspace [%]		The ratio between the lettable and gross floorspace as a percentage.
Yearly rise in rent [%]		The percentage that the rent rises per year
Vacancy loss year 1 [%]		The vacancy loss in the first year as a percentage of the revenues of the same year.
Vacancy loss year 2 [%]		The vacancy loss in the second year as a percentage of the revenues of the same year.
Vacancy loss year 3 [%]		The vacancy loss in the third year as a percentage of the revenues of the same year.
Loss due to friction [%]		The loss due to friction (tenants moving in and out) as a percentage of the (yearly) revenues (first payment at t=1)
Yearly maintenance costs [%]		The maintenance costs as a percentage of the sum of construction costs and overhead (first payment at t=1).
Year of first renovation [-]		The moment at which the first renovation is carried out.
Costs of first renovation [%]		The costs of the first renovation as a percentage of the sum of construction costs and overhead.
Year of second renovation [-]		The moment at which the second renovation is carried out.
Costs of second renovation [%]		The costs of the second renovation as a percentage of the sum of construction costs and overhead.
Year of third renovation [-]		The moment at which the third renovation is carried out.
Costs of third renovation [%]		The costs of the second renovation as a percentage of the sum of construction costs and overhead.
Yearly rise maintenance costs [%]		The yearly rise of the maintenance costs.
Other operating expenses [%]		Other operating expenses as a percentage of the yearly revenues (first payment at t=1).
Yearly rise land value [%]		The percentage the landvalue is expected to rise per year (needed to calculate the value of the land at the end of the exploitation period).
Yearly rise real estate value [%]		The percentage the real estate value is expected to rise per year (needed to calculate the value of the real estate at the end of the exploitation period).
Depreciation period [yr]		The depreciation period to calculate the value of the real estate at the end of the exploitation period (linear depreciation).
Exploitation period [yr]		The exploitation period in years.
Rate of return [%]		The required rate of return equals.

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