Residual method (bilan promoteur)

The bilan promoteur (developer’s appraisal, or residual method) works backwards. One starts from what the scheme will be worth once built and sold, deducts everything that will have to be spent to get there, and what remains is what a developer can pay for the site or the building to be converted. The Charte de l’expertise en évaluation immobilière (French property valuation charter) puts it this way: the value of a property in its current state is obtained by deducting from the value of the completed scheme all the costs needed to deliver it.

The method applies to building land in urban areas, to buildings under development, to properties intended for heavy refurbishment and to land assembly operations. The Charter notes that the courts accept it progressively, notably in thin markets or as a cross-check, and that the French State recommends it for its own estate.

Where the rule comes from

Title III § 2.8 of the Charter (6th edition, November 2025) sets out the methodology. The gross development value is that of the scheme as if completed at the valuation date, at current market conditions, not a future value. The costs are those of a typical purchaser: demolition, construction and infrastructure, technical fees, management and marketing, finance costs on the whole scheme, developer’s margin expressed as a percentage of costs or of the gross development value. After deducting the acquisition costs of the land, one obtains the residual value. The European Valuation Standards 2025 describe residual methods at § 9 of their methodology section, and EVS 6 uses them for properties subject to an energy deadline.

In a valuation report

I begin by checking what can actually be built (local planning rules under the PLU, easements, access, utilities, hazards), because the achievable floor area drives the whole calculation. I establish the gross development value by comparison with sales of new homes or premises, cost the works on recent ratios or quotes, and set the margin according to the risk of the scheme. The Charter requires the result to be tested against market ratios, the land-to-GDV percentage to be checked and the sources documented: small changes in assumptions move the result a great deal, and the report presents that sensitivity.

Example

A 1,500 m² urban plot allowing 900 m² of gross floor area, or about 800 m² of habitable space in twelve flats. Gross development value: 800 m² at €4,200 per m², or €3,360,000. Costs: construction €1,440,000 (€1,600 per m² of gross floor area), fees and technical costs 15 %, or €216,000, marketing 4 % of GDV, or €134,000, finance costs €90,000, margin 8 % of GDV, or €269,000. Total costs: €2,149,000. Residual value before acquisition costs: €1,211,000; after deducting 7 % acquisition costs, an affordable land value of about €1,130,000, or €1,255 per m² of gross floor area. A 5 % fall in sale prices would bring this figure down to about €990,000.

Not to be confused with

The comparison method on neighbouring plots remains the reference where it is possible; the residual method complements or replaces it when comparables are lacking. The DCF projects rental income; the residual method projects a single sale on completion.