What to take into your next appraisal
- Reconcile gross land to roads, public areas and saleable plots.
- Allocate infrastructure by engineering scope and capacity.
- Connect each plot release to documented authority and utility milestones.
Define the subdivision and sales route
Start with the approved or proposed subdivision layout and identify the responsible municipality, utility providers and title team. Record whether the strategy sells completed serviced plots or involves off-plan activity. REGA off-plan licensing requirements become a separate diligence workstream where that regime applies.
Do not assume a landholding is saleable merely because the spreadsheet divides it into plots. The model needs evidence for legal subdivision, access, servicing, transfer and the intended marketing route.
Sources: Real Estate General Authority: Off-Plan Sales and Lease
Reconcile the land schedule
In a fictional SAR example, gross land is 100,000 square metres. Roads occupy 20,000, public or utility areas 10,000 and saleable plots 70,000. At an assumed SAR 1,000 per saleable square metre, gross revenue is SAR 70 million.
Pricing all gross land at the plot rate would overstate revenue by SAR 30 million. Reconcile the plotted areas to the current drawing revision and make any additional set-aside reduce the available inventory before calculating value.
Separate trunk capacity from phase costs
Assume trunk infrastructure costs SAR 12 million before any release, with phase works costing SAR 6 million for phase one and SAR 4 million for phase two. Total infrastructure is SAR 22 million, but the first release may need SAR 18 million of that expenditure.
Allocating costs evenly across two phases would hide SAR 7 million of early expenditure compared with the actual SAR 18 million first-phase requirement. Use the engineering programme for cash timing even if a different allocation is useful for phase profitability.
Link releases to evidence
Use a named owner for every handover and sales assumption.
| Milestone | Evidence to obtain | Model consequence |
|---|---|---|
| Plot layout | Current approved plan and title advice | Saleable area and plot count |
| Roads and utilities | Design scope and connection agreements | Works cost and payment schedule |
| Phase acceptance | Inspection and handover requirements | First eligible release date |
| Buyer transfer | Sale documentation and title process | Settlement receipt |
Stress the front-loaded funding requirement
If phase-one settlement of SAR 28 million moves by three months, keep the incurred infrastructure cost in the original months unless construction also changes. Funding rises even where eventual sales and margin are unchanged.
Show land cost, infrastructure, fees, tax, finance and remaining obligations before distributing plot proceeds. The decision paper should explain which infrastructure serves later phases and whether the first-phase financing can carry that shared cost.
Sources and further reading
- Off-Plan Sales and Lease Real Estate General Authority
- Valuation of development property RICS
Published by Feasly. How we prepare our guides. Suggest a correction.
