If you’re considering a property development project, you need to understand what Gross Development Value or GDV is. Understanding what it is, how it works, and how you can calculate it can help you make informed decisions about your property investment.
Key Takeaways
- GDV represents the total estimated market value of a completed property development, and helps property developers (and lenders) assess whether the project is financially viable before committing funds.
- Calculating the GDV involves multiplying the total saleable area by the market value per unit, then adding other revenue streams like parking.
- You want to avoid overestimating project returns. So to accurately estimate GDV, you’ll need to complete thorough market research, generate realistic cost projections, and have knowledge of local property trends.
What is Gross Development Value (GDV)?
GDV is the total estimated market value of a property development once it’s fully completed and ready to sell or let. Really, it’s the projected revenue you’d generate if you sold every single unit in your development at today’s market price.
For property developers, GDV is one of the most important performance metrics you monitor through your project. It helps you determine whether you’re likely to make a profit.
So, let’s say you’re developing 10 offices in a block, your GDV will be the combined market value of all 10 units, plus additional income from things like parking spaces or storage units.
Why GDV matters for property finance
Aside from personally knowing how much profit you’re likely to make from your development sale, lenders care about GDV, too. When you approach lenders for finance, they’ll want to see your GDV calculations. They use your figure to assess how risky your project is and the potential return it can bring.
Property development remains active, with a 5% increase in housing programmes reported between April 2024 and March 2025 compared with the previous year. Because sites are so sought after, getting your hands on one is increasingly difficult, and even harder without the right numbers. So calculating your GDV has never been more important.
With a strong GDV, lenders see that your project has solid financial foundations. It gives you the ability to make strategic decisions when it comes to acquiring land, overseeing marketing, or managing business finances in general.
Gross development value calculation
The basic formula to calculate GDV is relatively straightforward:
Step one: Calculate your total saleable area
You need to know how much space you’re selling. So measure the gross internal area of each unit in your development.
Step two: Research market values
The most reliable source for property sales from about three months to 12 months old is, of course, HM Land Registry. Search by postcode for every transaction.
As it can take months for the Land Registry to update, you can contact local estate agents for timely information from the last few weeks to understand real-time sales data. This data can help you understand what other developments are selling for per square metre or per unit as of right now.
You can also try selling platforms like Zoopla and Rightmove, as they have original listing photos and floor plans, which can help you understand the condition of the properties when they were sold. And you can also visit property.data.co.uk to understand ‘asking price’ trends and ‘sold data’.
Step three: Do the calculations
Use this formula to help you work out GDV.
GDV = Total saleable area x market value per unit + additional revenue streams
Step four: Add any additional revenue streams
Anything additional will add value to your development’s GDV. So include anything like parking spaces, storage units, commercial leases, and service charges here.
Step five: Account for market conditions
Don’t forget to adjust your calculations based on current and projected market conditions. Things like supply and demand, economic factors, etc., all affect your property’s value.
Gross development value example
It’s useful to imagine a scenario to help make sense of GDV in real life. So, let’s say you’re developing 20 residential flats in Liverpool. And the average two-bedroom unit in the city centre costs £220,000.
| Residential Sales | |
| Number of Residential Units | 20 |
| Average Market Value per Unit | £220,000 |
| Base GDV (20 x £220,000) | £4,400,000 |
| Additional Income | |
| Annual Service Charges (20 x £2,300 per unit) | £46,000 |
| Ground Floor Commercial Rental Unit | £150,000 |
| Total Gross Development Value (GDV): | £4,596,000 |
What is GDV in property vs total development cost
Both the GDV and total development cost work together to help you understand the profitability of your project.
Total development cost is everything you’ll spend on the project. From land acquisition and construction costs to finance costs and professional fees.
Your profit sits between the total cost of development and the GDV. Let’s say the project of 20 units costs you £2 million. Using the figures in our example:
£4,596,000 (GDV) - £2,000,000 (costs) = £2,596,000 profit
Key factors that influence GDV
There are a few things that can impact your development’s GDV.
- Location. Location is everything when it comes to property. Prime locations mean premium price tags. If your development is near a railway or other transportation links, or has good schools nearby, it’ll positively influence pricing.
- Property type (and quality). The higher the quality of each unit, the higher the price.
- Market conditions. There are plenty of factors affecting how much someone will pay for your unit. Interest rates, employment levels, etc., all play a part.
- Planning regulations. If local plans limit building to just four stories, but you were planning to build higher, this will affect your GDV. Always be aware of local planning and zoning regulations.
- Developer reputation. If you’re known for quality work, then buyers might be willing to pay more.
Four mistakes to avoid when calculating GDV
Here are some common mistakes to avoid.
1. Don’t overestimate market values
Developer’s optimism is real, and it’s great to be optimistic, but you also need to be realistic. Only base your GDV calculations on solid sales data.
2. Don’t ignore additional revenue streams
Even if you think your additional revenue stream is minor, always include it in your calculations. Any additional streams can add value.
3. Don’t forget to adjust for market trends
Always keep an eye on local market conditions. What sold last year for £250,000 might sell for £30,000 less this year.
4. Always use up-to-date data
Seek out the most recent sales data available when doing your GDV calculations. Market research can quickly become outdated.
How to secure development finance
Once you know your project is viable (and your GDV calculations are backed by solid evidence), securing commercial property finance is your next step.
We work alongside a panel of UK lenders, many that specialise in property development. So whether you need commercial bridging finance for buying land or property development finance for construction, we can help you find and compare options quickly.
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Gross Development Value FAQs
Will the lender get an independent appraisal for my GDV?
Yes, the lender will ask an independent appraiser to calculate your GDV. That’s another reason why you don’t want to overinflate it in the first place. The lender will take the appraiser’s calculation as gospel.
What’s the difference between GDV and profit?
GDV is the total value of your completed development, should you sell it. The profit is what’s left after you subtract the total cost of the development from the GDV.
How often should I recalculate GDV during a project?
Whenever there are significant changes in the market, you should recalculate GDV. This happens mainly in longer-term projects.
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