What to Look for in a Development Appraisal: Beyond Just GDV

PropInvest Co.
Jul 28, 2025
4 min read

When people start looking at development deals, the first number they usually focus on is GDV (Gross Development Value). It’s understandable. It’s the shiny, headline figure. The projected end value. The “this is how much we could make” number.

But here’s the truth:

GDV is only one part of the story, and it can be dangerously misleading if you don’t know how to read the full picture.

At PropInvest, we’ve reviewed hundreds of appraisals and partnered on dozens of successful projects. Over time, we’ve learned exactly what separates a solid, bankable deal from a potential headache (or disaster).

Whether you’re an aspiring developer, a JV partner, or an investor looking to upskill, this blog will walk you through the real elements of a development appraisal that matter.

1. GDV is a Projection, Not a Guarantee

Let’s start here. GDV is based on comparables, assumptions, and local market sentiment. It’s only as good as the research behind it.

Ask:

Are the comparables recent?
Are they genuinely comparable in terms of finish, size, and location?
Has any buffer been applied for potential market cooling?

Red flag: If the GDV is based on best-case or speculative valuations with no margin for correction, the deal is already shaky.

2. Know the Build Costs, And How They’re Calculated

The second critical input in a development appraisal is build cost.

But not all build cost estimates are created equal.

✔️ Was it based on current QS data or outdated £/sqft figures?

✔️ Does it include contingency (ideally 10–15%)?

✔️ Are prelims, overheads, professional fees, and infrastructure costs accounted for?

You’d be surprised how many appraisals we see where only the bare bones of build cost are included, completely ignoring site access, demolition, drainage, or rising material costs.

3. Factor in Time, Not Just Cost

Time is money. Every week a project is delayed eats into your return.

A robust appraisal will:

Build in realistic timelines, not aspirational ones
Include buffer time for planning, utilities, or weather
Account for finance costs over the full duration (not just the construction phase)

If the appraisal assumes a 9-month build with no delays, no inflation, and no holding costs post-completion, it’s not worth the spreadsheet it’s written on.

4. Finance and Funding Assumptions

An experienced developer builds in proper finance costs, including:

Arrangement fees
Broker fees
Exit fees
Legal fees
Interest roll-up or service costs

And if investor equity is being used, the cost of capital should be clearly stated.

Transparency matters. If someone’s hiding the true cost of money, it suggests they’re either inexperienced… or hiding something worse.

5. Profit on Cost vs Profit on GDV

This is one of the most misunderstood metrics in development.

Profit on Cost (PoC): Your return based on your actual outlay
Profit on GDV: Your return based on the sales value

We always measure deals using Profit on Cost. Why? Because that’s the true risk vs reward metric.

A deal with a 20% profit on GDV might only deliver 12–13% PoC, which is very thin when you factor in risk, inflation, or unexpected delays.

6. Developer Fee and Contingency

Professional developers will always include:

A developer fee (5–10%) — this is your payment for risk and project management
A contingency buffer (10–15%) — especially for groundworks or brownfield sites

If these are missing, ask why. Cutting corners here is a sign of an over-optimistic appraisal designed to impress, not deliver.

7. Exit Strategy and Market Absorption

A deal isn’t finished when it’s built, it’s finished when it’s sold (or refinanced).

Make sure the appraisal considers:

Realistic sale timelines
Market demand for unit types
Exit fees, such as estate agents, marketing, staging, and legal costs

Can the market absorb 10 new townhouses in that area in the timeframe projected? If not, the “profit” might be stuck in inventory for months or longer.

8. Sensitivity Analysis: What If Things Go Wrong?

One of the most powerful, and underused, tools in a development appraisal is the sensitivity table.

This shows how the deal performs if:

GDV drops 5–10%
Build costs rise
Delays occur

If the deal collapses under mild pressure, walk away. Resilient deals are built for turbulence, not just sunshine.

9. Who’s Behind the Numbers?

Finally, even the best appraisal is only as trustworthy as the person who built it.

Ask:

Has this developer delivered projects before?
Do they have a track record of hitting budgets and timelines?
Are they putting their own money in? (Skin in the game matters.)

A professional developer will be transparent about their numbers, their assumptions, and their experience. If you’re met with vagueness or ego, move on.

An Appraisal is a Tool, Not a Crystal Ball

No development appraisal can predict the future. But it can show you whether the risks have been thought through, the numbers make sense, and the team behind it is serious.

At PropInvest, we don’t expect every JV partner to be an appraisal expert, that’s our job. But we do want our investors to be informed. To know what questions to ask. To spot when something feels off. And to trust that we’re asking those same questions ourselves.

Because investing in development should be a partnership, built on clarity, confidence, and shared accountability.