The assessment of whether a development proposal is marketable is critical to the evaluation process. In the first place it will influence whether a site is even considered to be a development site or not — if there is no market for a superstore in a small town, no site within the town can be regarded as a development site for this purpose. Secondly, it has an obvious bearing on the value of the site. Assume two pieces of land on the edge of a town, one of 0.4 ha (1 acre) and the other of 20 ha (50 acres). Both are proposed for housing, but the larger site would take ten years to develop. If the value of the smaller site is £500 000, that of the larger site will have a lower value on a pro rata basis because the site will take much longer to develop and market. Half the larger site may not be developed for say five years. This half will be less valuable than the area that can be developed and sold immediately. If someone pays £500 000 for 0.4 ha (an acre) of land which generates a return in one year he will pay less, now, for 0.4 ha (an acre) of land that generates the same return, but in three year’s time. The reason is that the return in one year’s time could then be invested so that in three year’s time it would produce, say, an extra 40 per cent, compared with the land that does not produce a return until the five years have elapsed.
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