Land value for development (charge foncière)

Charge foncière is the name development professionals give to the price of land, or more exactly to what the land can cost for a scheme to remain viable. It is the outcome of the residual method: gross development value of the scheme, less construction costs, fees, marketing, finance costs and margin, less acquisition costs. The term has no statutory definition; it belongs to professional usage, and the Charte de l’expertise en évaluation immobilière (French property valuation charter) deals with it through the residual method and its cross-check by the land-to-GDV percentage.

It is generally expressed per m² of permitted gross floor area, which allows plots of different sizes and development potential to be compared: two plots of the same area do not have the same land value if one allows twice as much floor space as the other. One also speaks of “affordable” or “supportable” land value to describe the maximum a developer can pay.

Where the rule comes from

Title III § 2.8 of the Charter (6th edition, November 2025) describes the method of which the land value is the end result. § 2.8.3 recommends checking the land-to-GDV percentage, higher in the best locations, and testing consistency against market ratios. The European Valuation Standards 2025 deal with residual methods at § 9 of their methodology section. In compulsory purchase and pre-emption, the land value for development often serves as a cross-check for building land, subject to how the property is classified at the reference date.

In a valuation report

I establish the development potential (permitted gross floor area, number of dwellings, required parking), the gross development value and the costs, then express the land value as a total and per m² of gross floor area. I compare it with sales of building land in the area, also reduced to a price per m² of gross floor area, and with the land-to-GDV ratio observed on comparable schemes. The report flags the uncertainties (no planning application yet, archaeological digs, decontamination, appeals) and their effect on the land value.

Example

A former warehouse on 2,000 m² of land, to be demolished, in a coastal town where the plan allows 1,200 m² of gross floor area. Residual appraisal: gross development value €4,500,000, total costs including margin €3,240,000, residual value €1,260,000, land value after acquisition costs €1,175,000, or €980 per m² of gross floor area and a land-to-GDV ratio of 26 %. Three sales of plots in the area range from €850 to €1,050 per m² of gross floor area: the calculated land value sits within that range and I adopt €1,150,000 for the property as it stands.

Not to be confused with

The price per m² of land (plot area) is misleading for building land: what counts is the floor area. The development tax (taxe d’aménagement) and planning contributions are costs of the scheme, to be deducted, not the land value itself.