Financial Analysis of Real Estate Valuation Principles and Techniques

Running head: Engineering Management
Engineering Management
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1ENGINEERING MANAGEMENT
Executive Summary
The aim of the project is to conduct a financial analysis of a Development project where the
same is executed with the real estate valuation principles and techniques. The development
cost and the other key input costs were taken into account while the cash flows associated
with the same were revaluated. The project was analysed from the developers prospective and
the sale of the asset class was also shown to John Wiley Pty Ltd. The developers profit ad the
return generated by each of them is evaluated. The scenario analysis and the changing debt
effect has helped us evaluate the key sensitive components of the project.

2ENGINEERING MANAGEMENT
Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Part A.....................................................................................................................................3
Part B......................................................................................................................................7
Part C......................................................................................................................................9
Part D.....................................................................................................................................9
Part E....................................................................................................................................10
Conclusion................................................................................................................................11
Reference..................................................................................................................................12

3ENGINEERING MANAGEMENT
Introduction
The Financial evaluation and analysis has helped us evaluate the key concept of real
estate valuation. The proposed Sub Division Residential Complex Development Project
evaluation composed of evaluating the total development costs and the same was accounted
using factors given like annual escalation in revenue and costs and the same was used for
determining the future cash flows for the company. The key assumption used in the project
was the total development cost to be considered as the final and all total cost for the
development of the project basis on which the finance costs was also computed. The scenario
analysis has two factors evaluated one is the optimistic level scenario and the other is the
pessimistic scenario (Yeh and Hsu 2018).
Discussion
Part A
1) Total Cost of the Sub Division Development as at 1st April 2018.
Part A
Total Cost of the Subdivision Development at 1st April 2018.
Particulars Amount
Location Purchase Cost 7,00,00,000
Demolition of Existing Building 55,00,000
Land Improvement Cost 45,00,000
Planning and Designing Cost 35,00,000
Aged Car Accommodation (145,000Per Unit*100 hectares) 1,45,00,000
Shopping Centre 19,50,00,000
Medical Centre Costs 3,00,00,000
External Work 3,50,00,000
Parks and Recreational Facilities 2,50,00,000
Annual Maintenance Costs 9,50,000
Building Designing Expenses 5,00,000
Total Cost of Development at 1st July 2018. 38,44,50,000