Glossary
Gross realisation value (GRV)
Also called: GRV, gross realisable value, end value
Gross realisation value is the total expected sale proceeds of a completed development, usually assessed by a valuer as the sum of the individual dwellings, lots or units if sold separately. It is typically stated including GST, before selling costs.
An example
A developer building a block of townhouses obtains a valuation that lists an expected price for each dwelling. The valuer totals those prices to arrive at the gross realisation value, which the construction lender then compares with its loan.
Why it matters
Many development lenders cap their loan as a share of GRV as well as a share of cost. GRV also drives the feasibility, because profit depends on what the stock will sell for. A borrower should check whether a lender uses GRV including or excluding GST, as it changes the result.
Points to check
Ask the valuer which sales evidence supports each dwelling price and whether prices allow for current market conditions. Check whether the lender's ratio uses the figure including or excluding GST. If the lender sets release prices for each dwelling, compare them with the valuation, because high release prices slow the reduction of the loan as sales settle.
Try it: Development feasibility calculator