Financing Assumptions

Valuation models often factor in the cost and structure of financing used to acquire and develop the property. These assumptions affect cash flow projections and investor returns.

• Loan-to-value ratio typically ranges from 60% to 75%
  
• Interest rates on commercial loans are usually between 9% and 12% per annum
  
• Loan tenure often spans 5 to 10 years, depending on project scale and lender policy

Cost-to-Carry Components

Cost-to-carry includes all ongoing expenses incurred during the holding period before income is generated or the property is sold. These directly reduce net returns and affect net present value.

• Property tax, land insurance, security, and maintenance
  
• Interest payments on borrowed capital during the pre-leasing or construction phase
  
• Administrative costs, approvals, and compliance fees