eres2010_130_Henneberry_MODELLING_THE_RELATI

The paper describes the development and application of physical-financialmodelling techniques to the analysis of relations between development design –covering the broad characteristics of a scheme, such as land use mix, developmentdensity and built form – and financial viability. It is divided into two parts

European Real Estate Society

Annual Conference

Milan, 23-26 June 2010

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Modelling the Relationship between Development Design and

Financial Viability

John Henneberry*, Eckart Lange, Sarah Moore3, Ed Morgan2 & Ning Zhao1

Departments of Town and Regional Planning1, Landscape2 and Civil & Structural Engineering3, University of Sheffield, Western Bank, Sheffield, S10 2TN, UK *Corresponding author: ; +44 (0)114 222 6911

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Abstract. The paper describes the development and application of physical-financial modelling techniques to the analysis of relations between development design – covering the broad characteristics of a scheme, such as land use mix, development density and built form – and financial viability. It is divided into two parts.

The first part covers the development of the model. Existing work on development and design processes gives limited attention to the engagement of the two. This circumstance is mirrored in design and development appraisal techniques and software. We use a real time 3D visualisation system to represent a proposed development. It allows the user to control the viewing position to explore all aspects of built form for a given site and to categorise and experiment with land and building use. This ‘live’ visualization is linked through a plug-in to a financial appraisal in a way that enables the financial structure (viability) of the scheme to be estimated instantaneously. The resultant model permits multiple alternative development strategies – incorporating a wide range of changes in uses and building designs – to be explored quickly and in detail.

The second part presents examples of the application of the model to demonstrate its potential. The tools available to developers to explore development strategies on particular sites are limited. Time and cost constraints often result in a combination of sketch schemes and outline (or even ‘back of the envelope’) appraisals being used to explore the relation between design and viability. Consequently, relatively few alternatives are considered in relatively little detail. The model addresses this problem and offers the potential substantially to increase developers’ capacity to consider alternative approaches to site development. This is illustrated with reference to a case study site. The model also allows analytical generalisation. Using this approach, the relations between built form and financial structure are explored.