Glossary of Terms

Total sales value of the completed development before any deductions. GDV represents the gross revenue potential of a project, calculated by multiplying each unit's price by the number of units, or total sellable area by price per unit of area.

GDV minus sales costs and VAT — the actual revenue you receive. NDV reflects what ends up in the project account after agent fees, legal fees, and tax deductions are taken from gross sales.

Sellable or lettable floor area, excluding common areas, walls, stairs, and building services. NIA is the area that buyers or tenants actually use and pay for.

Total internal area of a building measured to the internal face of external walls, including common spaces, corridors, plant rooms, and service areas. GIA is the basis for build cost estimating.

The number of units sold per month, which determines the sales timeline and cash inflow schedule. A higher absorption rate means faster sales and earlier revenue, reducing finance costs.

The combination of different unit types and sizes in a development. For example, a project might have 40% one-bedroom, 35% two-bedroom, and 25% three-bedroom apartments, each priced differently.

All expenses associated with selling completed units, including agent commissions, legal fees, marketing costs, and show home expenses. Typically expressed as a percentage of GDV.

Commission paid to estate agents or sales brokers for marketing and selling units. Typically ranges from 1-3% of the sale price depending on market and property type.

Upfront payment from a buyer upon reservation or exchange of contracts, typically 10-20% of the purchase price. Deposits provide early cash inflow before construction completes.

Value Added Tax applied to property sales, varying by jurisdiction and property type. Some residential sales are VAT-exempt while commercial property typically carries VAT. Rates and rules differ by country.

Direct construction expenditure including labor, materials, and subcontractor costs. Build costs are the largest cost category in most developments and are typically quoted per square meter of GIA.

Professional fees and non-construction expenses including architecture, structural engineering, planning consultants, project management, insurance, and marketing. Typically 10-15% of build costs.

A reserve budget for unforeseen costs, typically 5-10% of construction costs. Contingency covers unexpected ground conditions, design changes, material price increases, and other risks that cannot be precisely budgeted.

Site setup and time-related costs including temporary facilities, site fencing, welfare units, scaffolding, cranes, and on-site project management staff. Preliminaries run for the duration of construction.

Non-construction expenses such as design fees, planning application fees, building permits, environmental assessments, insurance premiums, and legal costs related to land acquisition or contracts.

Roads, utilities, drainage, landscaping, and other site-wide works that serve the entire development. Infrastructure costs are separate from building costs and often front-loaded in the construction schedule.

The primary loan from a bank or institutional lender, which has first priority for repayment. Senior debt typically covers 60-70% of total costs (LTC) and carries the lowest interest rate in the capital stack.

A secondary financing layer that sits between senior debt and equity. Mezzanine carries a higher interest rate (typically 12-20%) because it is subordinate to senior debt and only repaid after the senior lender.

Total debt divided by Gross Development Value. LTV measures leverage against the end value of the completed project. Lenders use LTV to cap their exposure relative to the asset's worth.

Total debt divided by total project costs. LTC measures how much of the project spend is funded by borrowing. It is the primary metric lenders use to determine the maximum loan amount.

The annual cost of borrowing, typically charged on the drawn (utilized) balance of the loan facility. Interest accrues monthly and can be rolled up (added to the loan) or serviced (paid monthly).

A one-time fee charged by the lender to set up the loan facility, typically 1-2% of the total facility amount. Paid at loan drawdown or deducted from the first advance.

A fee paid to the lender when the loan is fully repaid, typically 0.5-1% of the total facility amount. Also called a redemption fee or completion fee.

The developer's own funds invested in the project — the difference between total costs and total debt. Equity bears the highest risk because it is repaid last, after all debt obligations are met.

An arrangement where an investor funds the construction of a development in exchange for ownership of the completed asset. The investor effectively purchases the building before it is built, providing the developer with construction capital.

Net Development Value minus Total Costs (including finance costs) — the bottom line of any development appraisal. Profit is the absolute amount the developer earns from the project.

Profit divided by NDV, expressed as a percentage. Margin tells you what percentage of your net revenue is retained as profit after all costs are paid.

Profit divided by Total Costs, expressed as a percentage. RoC measures how much profit is generated for every unit of cost invested and is the primary return metric used by developers.

Profit divided by Gross Development Value, expressed as a percentage. RoGDV provides a return measure relative to the project's total gross value.

The annualized return that accounts for the timing of all cash flows. IRR answers the question: what annual percentage return does this investment generate, considering when money goes in and comes out?

IRR calculated only on equity cash flows, excluding debt. Equity IRR measures the return to the developer's own capital, which is amplified by leverage (borrowing).

Total equity returned divided by total equity invested. A MOIC of 1.5x means the investor gets back 1.5 times their original investment, or a 50% total return on equity.

Today's value of all future project cash flows, discounted at a specified rate. NPV answers: is this project worth more than the capital invested, accounting for the time value of money?

Annual rental income divided by total development cost, expressed as a percentage. Development yield measures the income return relative to the cost of creating the asset. Used primarily for build-to-rent projects.

A user-defined profit threshold used for feasibility testing. When you set a target profit, Profivo can work backwards to determine the maximum land price or minimum sale price required to achieve it.

The maximum price a developer can pay for land while still achieving their target profit. RLV is calculated by subtracting all development costs and the required profit from the Net Development Value.

A technique for testing how changes in two input variables simultaneously affect profitability. A sensitivity matrix shows the impact of varying, for example, sale prices and build costs across a range of scenarios.

Comparing multiple complete project assumptions — typically pessimistic, base, and optimistic cases — to understand the range of possible outcomes. Each scenario can have different inputs for sales, costs, and timing.

The month in the project timeline when cumulative cash flow turns positive — the point at which total revenues received exceed total costs spent. Before break-even, the project requires ongoing funding.

The maximum total cash requirement at any point in the project — the deepest point of the cumulative cash flow curve before revenues begin to offset costs. Peak funding determines total capital needed.

A visualization of cumulative costs and revenues over the project timeline, forming an S-shape. The curve shows how spending accelerates during construction, then how revenue catches up during the sales phase.

The net of all inflows (sales revenue, deposits) and outflows (construction costs, fees, interest) in each month of the project. Positive months mean more money coming in than going out.

The running total of all cash flows from project start. Cumulative cash flow starts at zero, dips negative during construction (money going out), and eventually rises back to positive as sales revenue comes in.

The rate used to calculate Net Present Value, representing the time value of money and the minimum acceptable return. A higher discount rate means future cash flows are worth less today.

Annual percentage increase in build costs or sale prices to account for inflation. Cost escalation increases total project costs over time, while price escalation can improve revenue for longer projects.