What Does GDV Mean In Property Development?
GDV stands for Gross Development Value.
It is the expected open market value of a development scheme once the build is finished — in other words, what the completed property or properties should sell for. It is one of the first numbers a development finance lender will ask for, because most lending decisions are sized against it.
GDV is normally supported by a valuer’s report rather than the developer’s own estimate. Lenders will almost always use the valuer’s figure, and where the two differ, the lower one tends to win.
GDV Example
A developer converts a commercial building into six flats:
- Six flats, each expected to sell for £180,000
- GDV = £1,080,000
If the scheme includes a commercial unit retained for rental, its investment value would be added to the GDV as well.
Why GDV Matters To A Lender
Development finance is usually capped by two tests, and the lower result applies:
- A percentage of GDV — see LTGDV, commonly capped around 60–70%
- A percentage of total project cost — see LTC
A common mistake is assuming a strong GDV alone secures the funding. It does not. If the build costs are high relative to the end value, the loan-to-cost test will bite first and cap the facility well below the GDV-based figure.
GDV also determines the developer’s profit on cost, which lenders look at closely. Most want to see a margin of around 20% or better, because that is the buffer absorbing cost overruns and any softening in the market before the lender’s position is at risk.
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