Guildford Site Development Appraisal Essay Example | Topics and Well Written Essays - 2000 words

Guildford Site Development Appraisal - Essay Example Considering that the scheme is not fully pre-let, a higher rent is obtainable so long as it remains competitive. Under this scheme, the difference between the Developer’s fee and the minimum rent going to the fund is split between them at share percentage agreed early on. If the two parties opted for tranches of rent, then computation would proceed as in the following section. The use of mortgages is widely used in the industry for long-term funding. What the developer can offer as security is the first constructed building. Mortgages serve as a source for capital for the next phase construction and can also be used to pay accrued interests. A forward sale is when a party agrees to purchase part or the whole of the development after it is completed. Payment occurs at an agreed scheme but a part of it is usually paid beforehand. The money from the sale can serve as the capital for the succeeding phases of the development. The Local Authority may have the necessary funds to build the proposed development. This may work for the developer as he no longer needs to expose himself to risks of interest rates and pressure from repayment schedule. However, it is highly unlikely that the Local Authority would concentrate such a larger amount of their budget to the venture. Profit erosion with priority yield is a convenient way to finance the development project. However, the developer should determine whether he will avail of short-term, long-term or a combination. With the right choice, he may even realize a profit from the payments. Construction mortgages are offered by a variety of various institutions. Availing of one especially in financing construction projects is widely practiced. It falls upon the developer to find the bank with the least interest rate and flexible repayment schedule appropriate for the development. However, some developers have established such a good reputation that they obtain certain perks.