The residual value of a property is the value remaining after deducting all development costs from the Gross Development Value (GDV). It indicates the maximum purchase price an investor or developer can pay for a property without falling below the targeted minimum return.
The residual value method is not a standardized valuation approach under the ImmoWertV in the strict sense, but it is recognized in practice for project development and institutional financing — in particular for bank financing and acquisition decisions.
Residual value — simplified formula:
Residual value = GDV − construction costs − financing costs − ancillary costs − project profit
GDV = Gross Development Value (sales price of fully developed units)
The income forecast for the planned development follows the rules of the Income approach.
For assessing overall economic viability there is the Feasibility study.
