In the fall of 2016 experts of VALRUS performed appraisal of a development project, i.e. land plots for the construction of the 'Heritage' business class residential complex in Novosibirsk at Tupoleva Street. The developer of the project is Novostroy, one of the largest developers of Novosibirsk.
Currently there are multi apartment 2-3 storey residential buildings that are the monuments of architectural heritage requiring restoration, as well as 3-storey residential apartment buildings which are not monuments of architectural heritage; there are also industrial facilities and warehouses. The adjacent territory built up with sheds and indoor parking spaces is desolated and not in any way landscaped.
During project implementation, it is planned to build more than 100 thousand sq. m. The new construction at the territory of the military town presume complex development, which would be comfortable for living and working, including:
- resettlement of monuments of architectural heritage, their reconstruction and reorientation for public and business purposes
- clearing the territory and building new multi apartment residential buildings with public and business premises on the first floors and parking spaces on underground levels
- improvement of yard space with the replacement of children’s playground, sports areas, landscaping of the territory including a creation of boulevard
The appraisal was performed with the appliance of analysis of discounted cash flow approach towards the project planned for realization. Herewith, the experts in cooperation with the developer determined the most effective realization of land plot and most preferable indicators of future construction in terms of its volume and phasing. At the same time all comparable projects under implementation in Novosibirsk were studied. Due to the analysis it was possible to set not only the price parameters of the apartments and premises being sold, but also apartment layouts of the projects, requirements for parking lots, sales rates, total investment costs, average construction period and a number of other factors. Within this frame work the appraisal was conducted based on maximum volume of market data.
It was a challenging task to predict the market behavior for the period of the project implementation. In this regard the experience of previous cycles on the Russian real estate market was studied, as well as dynamics of price changing and construction cost, profitability of construction projects during different phases of cycle.
'Agency of independent appraisal 'Argument' (Director General N. N. Korolkov), our partners in Novosibirsk, provided a significant assistance in the market research during the project implementation.