Development Appraisal

Based on comparables found for the available land to purchase in Berlin, we would advise that the client should offer no more than €3.5 million to purchase the 6950 Sq. m site for the proposed development. An initial offer should be made below this amount to leave room for negotiations. An offer as low as €2.5 million may be acceptable for the location and size of the site based on the lower land purchase comparables. By negotiating a lower price for the land the profit percentage for the development could be increased. 

 A smaller than average 10% developers’ profit was used compared to the industry standard of 15 – 20%. This is because the development will be a positive contribution to the city, allowing the chance to offer more affordable housing to the local population and provide more equal opportunities for lower-income households to purchase in the city center, while also meeting ESG targets as sustainable developments are often more expensive.

 All build costs and the 7% contingency fees have been provided by Quantity Surveying Team.

 It has been assumed that all apartments and commercial units will be sold or let via pre-sale before the completion of the construction. To account for this the marketing and letting costs are at 10% of the total build costs amounting to over $4 million to ensure properties are all sold or let pre-sale. This number could be brought down slightly during the project as affordable properties should sell quickly.

 To ensure there is time for planning permission to be granted/adapted, the tendering process, and time for the current owners to maintain vacant possession of the property from the current tenants, the cash flow shows demolition starting in April 2027, with the overall construction process taking two years.  

Amelia O'Hara (RE)