A STUDY ON TIMING AND RATE OF RE-DEVELOPMENT DECISION TAKEN ON REAL ESTATE, SPECIAL REFERENCE TO RESIDENTIAL PROPERTY

The development process may itself be dynamic; one development may generate development elsewhere. On supply side, existing buildings wear out or become less suitable to present uses, and the cost of construing new buildings changes. Where land is already developed by having a building on it, fixed capital is embodied in the land. Such capital has no cost in the short period, as a result, the redevelopment has become a new use. This redevelopment requires expenditure of further capital, which usually occurs only after a considerable period of time. In order for the redevelopment to be profitable, the value of the cleared site for the new development must exceed the value of the site and the buildings in its existing use. Over the time, buildings tend to become increasingly unsuited for the demands placed upon them by the market thus, influencing achievable rents. In addition, periodic updating often becomes more difficult and more costly. Value of cleared site is equal to the present value of the most profitable alternative use less the cost of clearing the site and rebuilding for this new use. Key words: Real assets, Re-development, Value of the cleared siteFor full paper: fmscresearch@sjp.ac.l