W11P165

Task 1 - Essay

Japanese Regeneration and Transit-Oriented Development A Case Study of Oshiage, Tokyo

By Yudi Liu Regeneration processes vary region by region due to differences in governance, planning, and development cultures (Sanya, 2005). This indicates a difficulty in unifying an optimal paradigm of practice, but also implies an opportunity for transferring interregional experiences to improve existing practices (Karadimitriou et al., 2013). During recent decades, Transit-Oriented Development (TOD) emerged as a path to approach sustainable development (Suzuki et at., 2013). In Tokyo, a transitoriented city (Ieda&Yajima, 2014), regenerations often involved railway firms as dual investors for public transport and property development (Chorus, 2012). Based on a case study of the Oshiage project, this essay argues that, despite inevitable risks, railway firms’ transport-property integrated regeneration promotes realizing sustainable values advocated by TOD scholars. Particularly, this realization relies on three pillars: a thorough public-private corporation, a land value capture strategy, and an incentive planning system.

Table 1. Conceptual Graph of Tokyo’s Transit-Oriented Regeneration

Figure 2. Oshiage’s Planned Site Map

Source: Sumida Ward (2007) with self-translation (Detailed description in Appendix)

Developed by Tobu Railway Co., Ltd., Oshiage regeneration is a property-led project in Tokyo’s old town with a fragmented built environment (Sumida Ward, 2017). The project has two anchors: (1.

Tokyo Skytree, the world’s tallest 634 m telecommunication tower; and (2. Two existing railway stations with Tobu’s businesses. As the site map indicated (Figure 2), the site is right between the two renewed stations with the new tower in the center. Upon these, Tokyo Solamachi, a commercial complex with 52,000 m2 lettable area, and Tokyo Skytree Tower, an office building with 25,500 m2 lettable area, were also built (Tobu, 2019). In addition, local entities aimed to renew surrounding neighborhoods and waterfronts aside. By 2012, the project’s core zone was completed with mixed-use facilities achieved by the Japan development process.

Regeneration Process: Railway Firm as a Pillar In a word, the project is distinct with Japan’s corporative governance and Tobu’s multisectoral ownership. Japan’s governance model reflects the theory of Rhineland capitalist model (Bessant& Tidd, 2007). In opposite to the Anglo-Saxon model that values individual freedom and inter-organizational competition, continental Europe, and developed East Asia’s Rhineland model focuses on collective consensus and inter-sector corporation (Heurkens, 2009). As the project’s stakeholders (Table. 1) showed, the regeneration involves frequent corporations across entities under both public and private ownership (Sumida Ward, 2007). The prefecture-level Tokyo Metropolis and municipality-level Sumida Ward governments co-participated in many divisions of the project. Also, they kept cooperating with Tobu Railway, a private developer, in even more parts. In consequence, this close and consistent intersector corporation served as a basis for the regeneration’s development outcome in functional integration.

Regeneration Area

Core Zone

Green Zone Renewal Zone Vibrancy Zone Facility

Task Telecom Tower Transport Commercial Core Office building Hazard prevention centre Waterfront Network Hospitality Safety Vibrancy Comfortability Artery Transport Institution *. Main stakeholder *. Minor stakeholder

Stakeholders Tobu Railway

Tokyo Metropolis

Sumida Ward

Table 1. Regeneration Zones, Stakeholders and Completion Years

Source: Sumida Ward (2007) with self-translation (Full record in Appendix)

Residents

Completion 2012

2020 2025 2020 2025

On the other hand, Tobu Railway’s multifaced ownership roles within the process is remarkable. As the private infrastructure and property developer, Tobu marked the project as a property-led regeneration (Turok, 1992) and participated in most stages (Table. 1). Furthermore, using Adams& Tiesdell (2013)’s role-based real estate development process as a framework (Figure 3), the firm played a distinctly diversified role in the project. In detail, it is the landowners, the land developer, the parcel developer, the main investor, an infrastructure provider, and a building contractor simultaneously. These roles enabled Tobu to fully or partially engaged in the regeneration’s development, financial, and landed interests.

Overall, despite less active engagements in political, labor, and material markets, this railway company played about a half of development roles with many businesses a transport operator rarely does.

Figure 3. Role-based Real Estate Development Process of Oshiage Regeneration Source:Adams& Tiesdell (2013); Sumida Ward (2007)

Regarding the development outcome, Oshiage’s governance and ownership induced a functionally consolidated regeneration. As the site map presented (Figure. 2), the completed project site in mixed-use and offers a variety of facilities, including the telecommunication tower Tokyo Skytree, commercial spaces, office spaces, public spaces, as well as waterfront amenities. The peripherical areas were rather minor, but also planned as a renewal neighbourhood due to its proximity to the development. The core area’s floor plan (Figure 4) also showed functional diversity. The integration of two railway stations is recognizable in both plans. After the regeneration, Oshiage station is right on the core’s underground floor, and Tokyo Skytree station, as known as Narihirabashi station previously, is tied to next to the core. Evidently, the Japanese public-private corporation and Tobu’s multisectoral roles enabled these functional integrations that offered convenience and mobility. Meanwhile, besides this contribution to development outcome, Tobu’s roles also profoundly impacted its funding capacity for the project.

Figure 4. Floor Plan of Oshiage Regeneration’s Commercial Core Source: Tobu Railway (2020)

Land Value Capture: Financial Strategy of Japanese Regeneration Beyond the design and engineering integrations, the financial aspect reflects a more intimate relationship between transport and property businesses under Tobu’s unified ownership. Financially, Tobu used its equity and Eurobond to fund most of the regeneration’s 143 billion JPY, about 1.08 billion GBP, total investment with public funds’ minor support (Tobu, 2019). Mainly, the government funded 46% of the site’s 10 billion JPY, or 75 million GBP, land readjustment cost. The strategy behind Tobu’s funding capacity is Land Value Capture (LVC). In a word, LVC is a strategy to gain land’s economic rents to benefit the public based on George (1879)’s argument: individuals should not possess economic rents from land as nature’s creation. Although, at first, George (1879) proposed a more radical strategy of land value tax, developers nowadays, such as Tobu, are usually practicing moderate and tailored LVC strategies.

In detail, a regeneration requires negotiations between landowners, developers, and transport operators, but Tobu served as these triple roles and enabled a monetary flow between each business (Figure. 5) (Liu, 2019). Murakami (2015)’s analysis of private Tokyo’s railway-led development also supported this argument, but the author only indicated using property profits to fund railway operation.

However, because 68.2% of Tobu’s revenues were from railway operation with only 28.3% from property development (Figure. 6), these two businesses are, in fact, mutual subsidizing. As an implication, considered Tokyo’s persistent regeneration boom (Sorensen et al., 2010), this LVC strategy fulfilled two purposes: (1. Supporting a capable and sustainable public transport sector; and (2. Funding regeneration projects wherever needed.

Figure 5 - Tobu’s Development Model

Source: Adopted from Liu (2019) &Tobu (2019)

Figure 6 - Tobu Railway’s Revenue Structure Source: Tobu (2019)

Critically, as a private firm, Tobu cannot fully redistribute the land’s economic rents to the public, but it did capture a part of it for public uses. As Suzuki et al. (2015) categorized, there are four types of land values: (1. development value, (2. public investment value, (3. private investment value, and (4. intrinsic value. Public sectors should keep the first two types of values generated by population& economic growth, public regulatory, and infrastructure changes. Oppositely, private developers are proper to keep the latter two types of values from the land’s intrinsic value or generated by private investment. Based on this discussion, Murakami (2015) supported Tobu Railway’s business strategy is just an LVC scheme that transferred property businesses’ profits to sustain public transport operation and public facility provision, vice versa.

Institutional Framework: An Incentive Planning Regulation The third and last pillar of Oshiage regeneration is Japan’s development-promoting planning system. Briefly, Japan has four national regulations: (1. Urbanization regulation, (2. zoning regulation, (3. development project, and (4. district plan (MLIT, 2020). In addition, the community development scheme of Machizukuri also plays a role. The urbanization regulation simply defines whether an area should urbanize or not., and the zoning regulation defines intended land-use types. Peculiarly, instead of assigning a specific land uses to a land parcel, this system allows high-density zones to be compatible with lower-density uses. As the densest zone, the “commercial zone” permits all types of land uses with a high Floor Area Ratio (FAR) allowance except heavy industrial use. This peculiarity effectively supports regenerations like the Oshiage project to mix land uses and architectural functions with fewer regulatory barriers.

Figure 7. Layers of Japanese Land Regulation Source: MLIT (2020) with self-translation

The development scheme is a rather complicated system that covers both infrastructure construction and development incentive projects. Development incentive schemes include land readjustment and urban regeneration as two representative regulations. As Suzuki et al. (2015) noted, land readjustment assists the site to purchase fragmentedly owned lands and reallocate them to set a desirable development site. Urban regeneration (scheme) especially promotes relevant development with exceptional FAR allowance and financial supports (MLIT, 2020). Inspired by Germany’s Bebauungsplan, as known as B-Plan. Japan’s district plan is a top-down institution for a smaller parcel of land’s integral development (Takamizawa, 1992). FAR promotion, land use management, and built form adjustment are the system’s common goals. As the overview in Figure. 7 presented, these regulations together often demonstrated a purpose of promoting a development, which is usually around public transport nodes like Oshiage.

In addition to these top-down regulations above, Japan also practices a bottom-up community development institution named Machizukuri. Literally, Machizukuri means town-building in Japanese, but Hein (2002) concluded it as “small-scale urban design that arises out of citizen participation and community organization” that paralleled with city planning regulations. In practice, Machizukuri gathers stakeholders to collect opinions and suggestions with an emphasis on physical built environment. As Kusakabe (2013) analysed, the institution plays an essential role in achieving sustainability from the local level, yet Hein (2002) noted Machizukuri and top-down regulations integration demands further integration for effectiveness.

Critical Perspectives: Values and Risks Political Economic Social Technological Environmental Legal

Value

Risk

Architectural innovations& research support Sustainable urban form and waterfront amenity Planning regulation examination

Planning regulations’ uncertain impacts

International reputation from landmark Growth in economy, employment, and tourism income Convenience and mobility improvement

Civil disagreement Uncertain investment return& unequitable commercial rent Displacement& private sector’s empowerment snow block falling& electromagnetic wave interference Ibid. Increased wastes& noises

Table 2. A Brief PESTEL Analysis

Source: Adopted from Aguilar (1967)’s framework with cited sources below.

A PESTEL analysis usually evaluates external factors affecting a development, but, as an alternative application, it also provided a six-perspective framework to identify the project’s values and risks (Table. 2). Given values, (1. Politically, Tokyo Skytree, the world’s tallest telecommunication tower, promoted the city’s international reputation. (2. As a property-led regeneration, the site also induced growth in economy, employment, and tourism revenues to stakeholders (Tobu, 2019). (3. Based on TOD theory, the project’s integration of infrastructures and multimodal transports socially boosted the area’s convenience and mobility (Calthorpe, 1993). (4. Technologically, the tower contributed to technological advancements by practicing architectural innovations and supporting meteorological research (Denken, 2020). (5. For environment, considered sustainable benefits argued by TOD and compact urbanism

(Jenks, 2019), the site optimized the urban from and waterfront amenity. (6. Legally, Oshiage’s examine the effectiveness and shortcoming of Japan’s various regulatory and participatory institutions.

Regarding risks, (1. opposite civil movements brought domestic political risks for Oshiage regeneration’s supportive public sectors (Yoshino, 2012). (2. Economically, the project is criticized as draining questionably returnable investments and lacking affordability for local commercial tenants (Ajiro, 2007). (3. Consequently, displacement would happen when wealthier tenants moved in. In addition, as a private firm, Tobu Corporation’s predominance for many businesses around this regeneration is also a typical situation that drains revenues from public affairs to for-profit business owners (Hall, 2014) (4. The technological challenges were mainly the tower’s risks of snow block falling and electromagnetic wave interference (Tomabechi, 2010). (5. Environmental risks also covered these two concerns, but extended to the increase of noises and wastes by the development and tourists (Sumida Ward, 2010). Lastly, legal risks were behind applied regulations’ essential purposes. (6. As Sorensen et al. (2010) discussed, Tokyo’s FAR-incentive instruments often prioritized economic competitiveness instead of social goods.

Conclusion: Achievements and Lessons from Oshiage It is common to anchor a regeneration around stations regardless of TOD’s emergence (Bertolini& Spit, 2005; Renne& Appleyard, 2019), but, upon development and planning process in Japan, the Oshiage project still offered three lessons: (1. First, the multisectoral interaction is a powerful path to mix land uses and architectural functions. As Tobu showed, public-private corporations and developers’ multisectoral roles both approach this path. (2. Second, as articles like Suzuki et al. (2015) supported, Tobu’s triple roles as the landowner, the property developer, and the transport operator promoted an LVC strategy that allows the firm’s property business and transport business to subsidize each other. (3. Third, for places seeking station-led developments based on TOD, the Japanese planning system presented regulatory promotions with a multi-layered framework that supports developments in high-density. Consequently, based on a PASTEL analysis, this property and transit-led project generated various values like economic growth, convenience improvement, and sustainable urban form.

Nonetheless, it also faced many risks, especially social displacement, environmental interference, and regulatory uncertainty. These perspectives remain lessons for future studies and projects to concern and learn from.

Figure 8. Completed Regeneration Core Source: Japan Bullet (2012)

Reference Adams, D. and Tiesdell, S., 2012. Shaping places: urban planning, design and development.

Routledge.

Aguilar, F.J., 1967. Scanning the business environment. Macmillan.

Ajiro., 2007. New Tokyo tower: Digital terrestrial television, us, and exciting electromagnetic wave (in Japanese). Ryokufu Press.

Bessant, J. and Tidd, J., 2007. Innovation and entrepreneurship. John Wiley & Sons.

Bertolini, L. and Spit, T., 2005. Cities on rails: The redevelopment of railway stations and their surroundings. Routledge.

Chorus, P., 2012. Station area developments in Tokyo: And what the Randstad can learn from it. Delft: Eburon.

Calthorpe, P., 1993. The next American metropolis: Ecology, community, and the American dream. Princeton architectural press.

George, H., 1879. Progress and poverty: An enquiry into the cause of industrial depressions, and of increase of want with increase of wealth. The Remedy. K. Paul, Trench & Company.

Hall, P., 2014. Cities of tomorrow: An intellectual history of urban planning and design since 1880. John Wiley & Sons.

Hein, C., 2002. Toshikeikaku and machizukuri in Japanese urban planning: the reconstruction of inner city neighborhoods in Kōbe. Japanstudien, 13(1), pp.221-252.

Heurkens, E.W.T.M., 2009. Changing public and private roles in urban area development in the Netherlands. The NEW Urban Question: Urbanism Beyond Neo-Liberalism, pp.345-355.

Ieda, H., and Yajima, T. 2014. Tokyo, world metropolis created by Railway. The Institute of Behavioral Sciences (in Japanese).

Japan Bullet., 2012. World's tallest tower Tokyo sky tree celebrates completion. Retrieved from. https://www.japanbullet.com/news/worlds-tallest-tower-tokyo-sky-tree-celebrates-completion Karadimitriou, N., de Magalhães, C. and Verhage, R., 2013. Planning, risk and property development: Urban regeneration in England, France and the Netherlands. Routledge.

Kusakabe, E., 2013. Advancing sustainable development at the local level: The case of machizukuri in Japanese cities. Progress in Planning, 80, pp.1-65.

Liu, Y., 2019. Transit-Induced Urban Transformation: A Comparative Study of Tokyo and Hong Kong. Master’s thesis, Columbia University.

Ministry of Land, Infrastructure, Transport and Tourism., 2013. MLIT-relevant policies for Tokyo skytree (in Japanese). Retrieved from. https://www.mlit.go.jp/common/000211727.pdf

Ministry of Land, Infrastructure, Transport and Tourism., 2020. City planning legislations (in Japanese). Retrieved from. http://www.mlit.go.jp/common/001268992.pptx Murakami, J., 2015. Inclusive Land Value Capture Schemes, Integrating and Regenerating the World’s Largest Metropolis: Tokyo, Japan. In Suzuki, H., Murakami, J., Hong, Y.H. and Tamayose, B. (eds). Financing transit-oriented development with land values: Adapting land value capture in developing countries. The World Bank.

Renne, J.L. and Appleyard, B., 2019. Twenty-Five Years in the Making: TOD as a New Name for an Enduring Concept. Journal of planning education and research, 39(4), p.402.

Sanyal, B. ed., 2005. Comparative planning cultures. New York: Routledge.

Sorensen, A., Okata, J. and Fujii, S., 2010. Urban renaissance as intensification: Building regulation and the rescaling of place governance in Tokyo’s high-rise manshon boom.

Urban Studies, 47(3), pp.556-583.

Sumida Ward., 2007. Oshiage-Narihirabashi area machizukuri grand design: Final report (in Japanese). Retrieved from. https://www.city.sumida.lg.jp/kuseijoho/sumida_info/houkokusyo/grand_final.files/gd-fainal.pdf Sumida Ward., 2010. Sumida new tower adjustment department (in Japanese). News Tokyo.

Retrieved from, http://www.newstokyo.jp/index.php?id=336 Suzuki, H., Cervero, R. and Iuchi, K., 2013. Transforming cities with transit: Transit and landuse integration for sustainable urban development. The World Bank.

Suzuki, H., Murakami, J., Hong, Y.H. and Tamayose, B., 2015. Financing transit-oriented development with land values: Adapting land value capture in developing countries. The World Bank.

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Journal of Architecture and Planning (AIJ), 435, pp.69-75.

Tobu Railway., 2019. Overview of property business (in Japanese). Retrieved from. https://www.tobu.co.jp/pdf/corporation/book_03.pdf

Tobu Railway., 2019. Proceeding “Tobu group mid-term operational plan” (in Japanese).

Retrieved from. https://www.tobu.co.jp/file/pdf/3772e8e218e011823b31a399f45fdd15/chukei.pdf?date=2019051 6125539 Tobu Railway., 2019. Tokyo Solamachi floor guide (in Japanese). Retrieved from. https://www.tokyo-solamachi.jp/cmspdf/floormap/0a79d49a890fa8fa275eb0e9d42 67a4d20255820202003.pdf Tomabechi., 2010. Problems of the new tower. in You are brainwashed by common senses (in Japanese). Yamato Press.

Turok, I., 1992. Property-led urban regeneration: panacea or placebo?. Environment and Planning A, 24(3), pp.361-379.

Yoshino., 2012. Tokyo skytree’s strategy and prospective (in Japanese). Retrieved from. https://www.matsuzawa.com/wp-content/uploads/2017/09/dbf6ddfac81e79b16de5e84a0 2ebbbcb.pdf

Appendix: Specific Site Plan

Figure 1. Specific Public Regeneration Aims in Oshiage Source: Sumida Ward (2007) with self-translation

Figure 2. Full Regeneration Process 2006 – 2025 Source: Sumida Ward (2007) with self-translation

Task 2 - Residual Valuation Exercise Gross Development Value (GDV) gross space Less lettable office space .

net lettable office space annual rent total annual rental income .

expected annual yield Years Purchase (YP) .

capital value from yield capital value from YP .

7,400 15% 6,290 £210 £1,320,900

sqm sqm per sqm

7.5% 13.3 £17,612,000 £17,612,000

LESS .

Development Costs .

gross office building space construction cost total build cost .

Site works including demolition, services, and abnormals .

Professional fees as percentage of construction costs and site works Professional fees .

Other fees to completion as percentage of construction and site works Other fees .

Contingencies as percentage of construction costs, site works, and fees (professional and other) Contingencies .

total at completion .

Interest (cost of development loan) to completion .

anticipated planning obligations .

required developer's profit (return) Developer’s profit .

total development costs

7,400 £1,250 £9,250,000

sqm per sqm

£350,000 12% £1,152,000 10% £960,000 10% £1,171,200 £12,883,200 £350,000 £230,000 15% £2,641,800 £16,105,000

.

EQUALS .

Residual Land Value

£1,507,000

Table 1. Assumption Calculation (Excel file for Task 2 with full data-related calculation process cells is available)

Question 1 The building’s immediate let after completion implies the investment’s security. This is because if the building is not let immediately, it will financially suffer from many aspects: 1. The first year’s total annual rental income will not exist at all.

2. The interest is a key here. If it is not let immediately, I will have no income to repay the loan.

In consequence, I will pay more loan-based interest as it will not decrease.

3. Without the first year’s income, the investment’s annual yield may change as well.

4. As the yield changes, total years to purchase may increase. Eventually, compared to those original assumptions, the investment will be harder to reach profitability.

5. The first year’s maintenance and service expenses will also have no revenue to cover.

6. Furthermore, as time goes by, the depreciation will reduce the building’s value.

Consequently, the investment will be less valuable than the original calculation.

Therefore, it is significant to let the building, because if it is not let immediately, many essential assumptions will change and make it a less profitable investment. Especially, because of a lack of money, more loan-based interest to pay is an inevitable and significant change.

Question 2 yield change change rate yield GDV required developer's profit total development costs Residual Land Value

-10%

-5%

-2%

0%

2%

5%

10%

6.8%

7.1%

7.4%

7.5%

7.7%

7.9%

8.3%

£16,398,533

£16,244,042

£16,158,914

£16,105,000

£16,053,200

£15,979,200

£15,864,836

£3,170,356

£2,294,905

£1,812,514

£1,507,000

£1,213,467

£794,133

£146,073

estimated market rent change estimated market rent estimated annual rental value GDV required developer's profit total development costs Residual Land Value

-10%

-5%

-2%

0%

2%

5%

10%

£189

£200

£206

£210

£214

£221

£231

£15,850,800 £2,377,620

£16,731,400 £2,509,710

£17,259,760 £2,588,964

£17,612,000 £2,641,800

£17,964,240 £2,694,636

£18,492,600 £2,773,890

£19,373,200 £2,905,980

£15,840,820

£15,972,910

£16,052,164

£16,105,000

£16,157,836

£16,237,090

£16,369,180

£19,568,889 £2,935,333

Table 2. Yield Change

£1,188,810

£9,980

£18,538,947 £2,780,842

£1,254,855

£758,490

£17,971,429 £2,695,714

£1,294,482

£1,207,596

£17,612,000 £2,641,800

£1,320,900

£1,507,000

Table 3. Estimated Market Rent Change with 7.5% Yield

£17,266,667 £2,590,000

£1,347,318

£1,806,404

£16,773,333 £2,516,000

£1,386,945

£2,255,510

£16,010,909 £2,401,636

£1,452,990

£3,004,020

construction costs change construction costs total construction costs

-10%

-5%

-2%

0%

2%

5%

10%

£1,125

£1,188

£1,225

£1,250

£1,275

£1,313

£1,375

Professional fees Other fees Contingencies total at completion total development costs

£1,041,000 £867,500 £1,058,350 £11,641,850 £14,863,650

£1,096,500 £913,750 £1,114,775 £12,262,525 £15,484,325

£1,129,800 £941,500 £1,148,630 £12,634,930 £15,856,730

£1,152,000 £960,000 £1,171,200 £12,883,200 £16,105,000

£1,174,200 £978,500 £1,193,770 £13,131,470 £16,353,270

£1,207,500 £1,006,250 £1,227,625 £13,503,875 £16,725,675

£1,263,000 £1,052,500 £1,284,050 £14,124,550 £17,346,350

GDV Residual Land Value

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£17,612,000

Site works change

-10%

-5%

-2%

0%

2%

5%

10%

site works Professional fees Other fees Contingencies total at completion total development costs GDV Residual Land Value

£315,000

£332,500

£343,000

£350,000

£357,000

£367,500

£385,000

£1,553,970

£1,530,485

£1,516,394

£1,507,000

£1,497,606

£1,483,515

£1,460,030

Professional fees rate change Professional fees rate Professional fees Contingencies total at completion total development costs

-10%

-5%

-2%

0%

2%

5%

10%

10.8%

11.4%

11.8%

12.0%

12.2%

12.6%

13.2%

GDV Residual Land Value

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£1,633,720

£1,570,360

£1,532,344

£1,507,000

£1,481,656

£1,443,640

£1,380,280

Other fees rate change

-10%

-5%

-2%

0%

2%

5%

10%

Other fees rate Other fees Contingencies total at completion total development costs

9.0%

9.5%

9.8%

10.0%

10.2%

10.5%

11.0%

GDV Residual Land Value

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£1,612,600

£1,559,800

£1,528,120

£1,507,000

£1,485,880

£1,454,200

£1,401,400

Contingencies rate change Contingencies rate

-10%

-5%

-2%

0%

2%

5%

10%

9.0%

9.5%

9.8%

10.0%

10.2%

10.5%

11.0%

Contingencies total at completion total development costs

£1,054,080 £12,766,080 £15,987,880

£1,112,640 £12,824,640 £16,046,440

£1,147,776 £12,859,776 £16,081,576

£1,171,200 £12,883,200 £16,105,000

£1,194,624 £12,906,624 £16,128,424

£1,229,760 £12,941,760 £16,163,560

£1,288,320 £13,000,320 £16,222,120

GDV Residual Land Value

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£1,624,120

£1,565,560

£1,530,424

£1,507,000

£1,483,576

£1,448,440

£1,389,880

£8,325,000

£2,748,350

£8,787,500

£2,127,675

£9,065,000

£1,755,270

Table 4. Construction Costs Change with 7.5% Yield £1,147,800 £956,500 £1,166,930 £12,836,230 £16,058,030 £17,612,000

£1,149,900 £958,250 £1,169,065 £12,859,715 £16,081,515 £17,612,000

£1,151,160 £959,300 £1,170,346 £12,873,806 £16,095,606 £17,612,000

Table 5. Site Works Change with 7.5% Yield £1,036,800 £1,159,680 £12,756,480 £15,978,280

£1,094,400 £1,165,440 £12,819,840 £16,041,640

£1,128,960 £1,168,896 £12,857,856 £16,079,656

Table 6. Professional Fees Change with 7.5% Yield £864,000 £1,161,600 £12,777,600 £15,999,400

£912,000 £1,166,400 £12,830,400 £16,052,200

£940,800 £1,169,280 £12,862,080 £16,083,880

Table 7. Other fees Change with 7.5% Yield

Table 8. Contingencies Change with 7.5% Yield

£9,250,000

£1,507,000

£1,152,000 £960,000 £1,171,200 £12,883,200 £16,105,000 £17,612,000

£1,152,000 £1,171,200 £12,883,200 £16,105,000

£960,000 £1,171,200 £12,883,200 £16,105,000

£9,435,000

£1,258,730

£1,152,840 £960,700 £1,172,054 £12,892,594 £16,114,394 £17,612,000

£1,175,040 £1,173,504 £12,908,544 £16,130,344

£979,200 £1,173,120 £12,904,320 £16,126,120

£9,712,500

£886,325

£1,154,100 £961,750 £1,173,335 £12,906,685 £16,128,485 £17,612,000

£1,209,600 £1,176,960 £12,946,560 £16,168,360

£1,008,000 £1,176,000 £12,936,000 £16,157,800

£10,175,000

£265,650

£1,156,200 £963,500 £1,175,470 £12,930,170 £16,151,970 £17,612,000

£1,267,200 £1,182,720 £13,009,920 £16,231,720

£1,056,000 £1,180,800 £12,988,800 £16,210,600

Interest change

-10%

-5%

-2%

0%

2%

5%

10%

Interest total development costs

£315,000

£332,500

£343,000

£350,000

£357,000

£367,500

£385,000

GDV Residual Land Value

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£16,070,000

£1,542,000

£16,087,500

£1,524,500

Table 9. Interest Change with 7.5% Yield

£16,098,000

£1,514,000

£16,105,000

£1,507,000

£16,112,000

£1,500,000

£16,122,500

£1,489,500

£16,140,000

£1,472,000

Anticipated planning obligations change Anticipated planning obligations total development costs

-10%

-5%

-2%

0%

2%

5%

10%

£207,000

£218,500

£225,400

£230,000

£234,600

£241,500

£253,000

£16,082,000

£16,093,500

£16,100,400

£16,105,000

£16,109,600

£16,116,500

£16,128,000

GDV Residual Land Value

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£1,530,000

£1,518,500

£1,511,600

£1,507,000

£1,502,400

£1,495,500

£1,484,000

developer's profit change rate developer's profit (as percentage of GDV) total developer's profit

-10%

-5%

-2%

0%

2%

5%

10%

13.5%

14.3%

14.7%

15.0%

15.3%

15.8%

16.5%

£2,377,620

£2,509,710

£2,588,964

£2,641,800

£2,694,636

£2,773,890

£2,905,980

total development costs

£15,840,820

£15,972,910

£16,052,164

£16,105,000

£16,157,836

£16,237,090

£16,369,180

GDV Residual Land Value

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£17,612,000

£1,771,180

£1,639,090

£1,559,836

£1,507,000

£1,454,164

£1,374,910

£1,242,820

Table 10. Anticipated Planning Obligation Change with 7.5% Yield

Table 11. Developer’s Profit Change with 7.5% Yield yield estimated market rent construction costs Site works Professional fees rate Other fees rate Contingencies rate Interest Anticipated planning obligations developer's profit (as percentage of GDV)

Slope -15094877 14970200 -12413500 -469700 -1267200 -1056000 -1171200 -350000 -230000 -2641800

Absolute value 15094877 14970200 12413500 469700 1267200 1056000 1171200 350000 230000 2641800

Rank 1 2 3 8 5 7 6 9 10 4

Table 12. Slope of Each Assumption As tables showed above, Table 12 conducted a sensibility analysis based on calculations in Table 2 – 11. These assumptions are calculated with the same set of change rates: -10% , -5%, -2%, -0%, 2%, 5%, and 10%. With every assumption’s change rates and coordinate residual land values, their slopes of change are calculated. As the Table 12 presented, changes in yield (#1) would most affect price I could offer for the site, followed by which in estimated market rent (#2), construction costs (#3), developer’s profit (#4), professional fees rate (#5), contingencies rate (#6), other fee rates (#7), site works (#8), interest (#9), and anticipated planning obligations (#10). Notably, the relationship between estimated market rent change and residual land value is positive, but which between other assumptions’ changes and residual land value are all negative. Therefore, it is reasonable to identify estimated market rent as the only and the most positively affective assumption, but still, yield is the most affective assumption based on its slope value.