How to appraise a development site in five steps

Every developer has a version of this process. The difference between a guess and an appraisal is whether each step runs on evidence. Here is the five-step method, and what "evidence" means at each stage.

Step 1 — Define the evidence radius

Draw a radius around the site that matches how buyers actually shop: typically 1–3 miles in urban areas, wider in rural markets. Too tight and you'll have too few comparables; too wide and you're pricing a different market. Sanity check: does the radius stay within the same school catchments, transport links and buyer profile?

Step 2 — Build the £/sqft evidence base

Pull every sold transaction in the radius with a verified floor area. Index each sale to today's money with the UK HPI. Trim outliers. Now you have a distribution of current-money £/sqft — the raw material for everything that follows. Look at the shape, not just the average: a tight cluster means a predictable market; a wide spread means price is very location- or product-sensitive within your radius.

Step 3 — Price each house type

For each planned house type, weight the comparables by proximity, recency and size similarity, then apply the locally measured new-build premium. The output should be a range with a confidence score — e.g. £387–£523/sqft, high confidence, 1,900 comps — not a single number. Multiply by planned floor areas for unit pricing and sum for GDV.

Step 4 — Evidence the sales rate

From nearby new-build sites' completion dates, derive units/month absorbed locally. This drives your sales programme length, finance costs and phasing decisions — and it's the number a lender will test hardest.

Step 5 — Run the residual

GDV from step 3, minus build costs, fees, finance (shaped by step 4's programme) and target profit = your maximum land bid. Run it at the low and high ends of the price range. If the deal only stacks at the top end, the evidence is telling you to bid less or walk.

The meta-rule: keep the evidence chain intact

A lender-ready appraisal can trace every number back to its source: this GDV came from these comparables, indexed this way, with this premium, absorbed at this measured rate. That traceability is what separates an investment case from a hope. Threshold produces the whole chain — comparables to land bid — from one pin, in under a minute.

Data referenced in Threshold is displayed under the Open Government Licence (HM Land Registry Price Paid Data, EPC Register, ONS, UK HPI). All figures produced by Threshold are statistical estimates for site appraisal, not RICS valuations.