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Land for Development Valuations

In supplementing the comparable sales method, potential township land can be valued by means of the developer’s approach whereby future net cash flows are discounted to present value. The critical factor in the Discounted Cash Flow (DCF) model is the time frame for the completion of the project. Once again it is knowledge of the local market which enables the professional to determine the availability of services and make reliable predictions of the demand for the finished product and the resulting absorption rate. Rustenburg is a town where in the 1980’s there may have been one new township brought out every three years, whereas currently up to twenty township applications submitted annually.

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