This section provides a financial appraisal of a proposed property development using the residue method of valuation. It details the gross development value, land and construction costs, administrative costs including fees and financing, and contingencies to calculate the total gross development cost. The gross development profit is then determined by taking the difference between the gross development value and cost, which in this case is RM16,305,112.44 or 29.94% of the gross development value.

1. 3.0 Financial Appraisal
In this section, financial appraisal approach adopted is Residue Method of Valuation, laid out as below.
(RM) (RM)
Double Storey Shop/Office
Intermediate 14 units RM850,000 / units 11,900,000
Corner 2 units RM1,600,000 / units 3,200,000
End 2 units RM1,000,000 / units 2,000,000
17,100,000
-359,100.00
16,740,900
Double Storey Terrace
Intermediate 69 units RM400,000 / units 27,600,000
Corner 7 units RM650,000 / units 4,550,000
End 7 units RM500,000 / units 3,500,000
35,650,000
less 7% bumiputra 30% registration -748,650.00
Double Storey Low Cost 34,901,350
Intermediate 54 units RM45,000 / units 2,430,000
Corner 5 units RM45,000 / units 225,000
End 5 units RM45,000 / units 225,000
2,880,000
less 7% bumiputra 30% registration -60,480.00
2,819,520
Total Gross Development Value 54,461,770
A) Gross Development Value

2. Land size 449,212.5 sq. ft.
Cost RM 15 / sq. ft.
Total Land Cost 449,212.5 sq.ft.x RM 15 6,738,187.5
Nos. of units Build-up Area Building Cost
Double Storey Shop/Office (sq. ft.) (RM / sq. ft.)
Intermediate 14 3,600 70 3,528,000
Corner 2 6,500 80 1,040,000
End 2 3,600 80 576,000
5,144,000
Double Storey Terrace
Intermediate 69 1,500 75 7,762,500
Corner 7 1,500 85 892,500
End 7 1,500 85 892,500
9,547,500
Double Storey Low Cost
Intermediate 54 900 35 1,701,000
Corner 5 900 40 180,000
End 5 900 40 180,000
2,061,000
Total Building Cost 16,752,500
Earth works (5% of building costs) 16,752,500 x 5% 837,625
Infrastructure costs (10% of building costs) 16,752,500 x 10% 1,675,250
Total Construction Cost 19,265,375
2) Construction Cost
B) Gross Development Cost
1) Land Cost

3. i Professional fees (9% of construction costs) 19,265,375 x 9% 1,733,883.75
ii Administrative fees (2% of GDV) 54,461,770 x 2% 1,089,235.40
iii Plan fees (RM 2,000 per unit) RM2,000 x 165 units 330,000.00
iv Contributions & fees (2% of construction costs) 19,265,375 x 2% 385,307.50
v Advertisement & marketing (1% of GDV) 54,461,770 x 1% 544,617.70
vi Conversion premium
Commercial (20% of land value of commercial lots)
Double Storey Shop/Office
(Nos. of units = 18 units)
(Land size = 2,240 sq. ft.)
(Land cost = RM 15 / sq. ft.) RM 15 x 2,240 x 18 x 20% 120,960.00
Residential (15% of land value of residential lots)
Double Storey Terrace
(Nos. of units = 83 units)
(Land size = 1,775 sq. ft.)
(Land cost = RM 15 / sq. ft.) RM 15 x 1,775 x 83 x 15% 331,481.25
Double Storey Low Cost
(Nos. of units = 64 units)
(Land size = 1,260 sq. ft.)
(Land cost = RM 15 / sq. ft.) RM 15 x 1,260 x 64 x 15% 181,440.00
vii Subdivision (RM 1,500 per unit) RM1,500 x 165 units 247,500.00
viii Legal fees (RM 2,500 per unit) RM2,500 x 165 units 412,500.00
Total Administrative Cost 5,376,925.60
3) Administrative Cost

4. i Financing Cost for Land
(Loan = RM 6,500,000)
(Interest = 2.5% p.a. + 6.5% BLR)
(Compound interest = [(1 + i)ⁿ - 1]) [(1+0.09)⁵-1] x RM 6,500,000 3,501,055.71
ii Cost of finance
(Construction cost = RM 19,265,375)
(Interest = 5.5% p.a. + 6.5% BLR)
(Assuming loan of 50%) (RM 19,265,375 x 50%) x 12% x 2 2,311,845.00
Total Finance Cost 5,812,900.71
Contigencies (5% of construction costs) 19,265,375 x 5% 963,268.75
TOTAL GROSS DEVELOPMENT COST 38,156,657.56
5) Contigencies
4) Finance Cost

5. Summary of Gross Development Cost (RM)
1 Land cost 6,738,187.50
2 Construction cost 19,265,375.00
3 Administrative cost 5,376,925.60
4 Finance cost 5,812,900.71
5 Contigencies 963,268.75
38,156,657.56
GROSS DEVELOPER'S PROFITS EXCLUDING TAXATION
Gross Development Value 54,461,770.00
(Less)
Gross Development Cost (38,156,657.56)
TOTAL GROSS PROFIT 16,305,112.44
% of Gross Profit (Profit / GDV) (RM 16,305,112.44 / RM54,461,770) x100% = 29.94%