Abstract
In the absence of comparable sales, the development approach to valuation (also known as residual valuation) is considered an acceptable method to determine the value of land. The method involves considering the value after the completion of the development, then by deducting the cost of such a development, the remaining amount (residual amount) is the amount that a developer would be prepared to pay for such a property in order to obtain the development potential (Boshoff, 2011). Currently, Airoli real estate market is saturated and recently there has not been any transaction related to land parcels, so to derive at a land value application of residual valuation approach is appropriate as it take into consideration current real estate market trends, which directly rely on the proposed mix of development conceptualized by developer.
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