- Project assumptions must be checked for legal, technical and economic plausibility before calculation.
- The total amount remaining is not automatically the land purchase price alone.
- Small changes in proceeds or costs can substantially alter the residual amount for the land.
Which question does the calculation answer?
The method starts with a possible development and works backwards from its economic result. Austrian Standards describes the residual valuation approach particularly for development cases and certain undeveloped properties or properties requiring fundamental revitalisation. A missing comparable price alone does not, however, establish a robust project. Professional selection of the method requires a suitable subject of analysis and sufficient input data.
For owners, the key question is whether a calculation is intended to support market value or show the individual acquisition limit of a particular developer. Special financing terms, in-house construction services or a personal profit target may affect that developer's willingness to pay. Such a calculation must not be adopted uncritically as a general market value.
Foundations: Austrian Standards International [1]
Which assumptions must be disclosed first?
Request a defined project with an area schedule and planning status. Proceeds must match the saleable or lettable floor area actually envisaged. A mathematically maximum building floor area is no substitute. Record which permissions, rights, utility connections or works to existing structures would still be required.
Review costs against a defined scope of work: construction, planning, project management, marketing, demolition, infrastructure and other property-specific tasks. Contingencies cover defined uncertainties; they do not automatically make a significant unknown risk calculable. Proceeds and costs also need consistent treatment of VAT, price dates and changes over time.
Foundations: Stadt Wien [2]
How can duplicate or missing timing allowances be avoided?
Disclose when the land is paid for, when construction expenditure arises and when sale proceeds are received. In a complete calculation, these payment dates affect financing or discounting. Developer's profit, financing costs and risk allowances must be conceptually consistent. The same effect must not be deducted several times without justification.
The following original teaching model is a simplified static project calculation over two years. It expressly includes financing costs and a fixed profit, but no additional discounting. It is not a complete valuation report and does not claim to apply the ÖNORM in full. All amounts and percentages are freely chosen assumptions; they are neither Vienna market parameters nor current tax or charge rates.
What remains before the land purchase?
The teaching model consistently uses amounts excluding recoverable VAT. Non-recoverable charges would be included in the relevant costs. Construction financing of 100,000 euros is a predetermined, separate model amount; it contains no land financing. Profit remains a fixed amount of 300,000 euros.
| Item | Amount |
|---|---|
| Assumed sale proceeds | 3,000,000 euros |
| Construction costs | −1,650,000 euros |
| Planning, ancillary project costs and marketing | −230,000 euros |
| Demolition and infrastructure | −100,000 euros |
| Cost contingency | −120,000 euros |
| Construction financing excluding land | −100,000 euros |
| Developer's profit | −300,000 euros |
| Remainder for land price, its acquisition costs and land financing | 500,000 euros |
How sensitive is the result?
The calculation in the example gives a land price alone of approximately 420,875 euros. In each following variation, the other model assumptions, including the fixed profit amount, remain unchanged. These are individual stress tests, not probabilities or an evidenced market range.
A longer duration would also change land financing, potentially other costs and the timing of marketing. A sound time comparison recalculates these effects. Finally, check a residual result against available land transactions and realistic alternative uses. A very low or negative residual initially shows that the development examined is not economically viable under these assumptions; it does not prove that the land is worthless.
| Change from the base case | Remaining budget | Calculated land price |
|---|---|---|
| No change | 500,000 euros | 420,875 euros |
| Sale proceeds 5 per cent lower | 350,000 euros | 294,613 euros |
| Construction costs 10 per cent higher | 335,000 euros | 281,987 euros |
| Both changes together | 185,000 euros | 155,724 euros |
Foundations: RIS [3]
Fictional calculation: from the residual budget to the land price alone
An original simplified teaching model with a two-year duration. The land and its acquisition costs are paid entirely at the start and modelled using simple interest of 5 per cent annually for two years. No principal repayments, compound interest or additional land-financing fees; acquisition costs are assumed at a flat 8 per cent of the land price.
- The project budget leaves 500,000 euros for land price P, acquisition costs and land financing.
- Land price and acquisition costs together amount to 1.08 × P. This entire initial amount is financed for two years.
- Land financing is 1.08 × P × 0.05 × 2 = 0.108 × P. Therefore: 500,000 = 1.188 × P.
- P = 500,000 ÷ 1.188 = 420,875.42 euros. Added to this are 33,670.03 euros in acquisition costs and 45,454.55 euros in land financing. Together they total 500,000 euros.
Here, the residual amount of 500,000 euros is not the purchase price. Explicit land financing also avoids mistakenly counting its interest as already included in construction financing.
Your next assessment steps
Record what you have already clarified and which documents you still need.
Document project floor area and status
This checks whether the basis for proceeds is legally and technically plausible.
Where can I obtain the supporting information?
Design, area schedule and available procedural documents.
Define cost items
This identifies gaps and double counting between construction, ancillary services and contingencies.
Where can I obtain the supporting information?
Specifications and transparent cost planning.
Request a payment and financing schedule
This makes duration, land financing and timing of proceeds visible.
Where can I obtain the supporting information?
The professional preparing the calculation or the developer.
Change assumptions individually
This shows which unresolved input most strongly limits the price derivation.
Where can I obtain the supporting information?
Have at least proceeds, construction costs and duration recalculated.
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Sources and date
The following sources support this main article. For your specific property, current documents and the applicable conditions matter.
- Austrian Standards InternationalÖNORM B 1802-3:2014 08 01 – public description of the scope of application
- Stadt WienLand-use zoning in Vienna
- RISProperty Valuation Act § 4: sales comparison approach
Editorial date: 11/09/2026. Examples explain relationships and do not contain an individually prepared property valuation. Editorial work and sources.
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