Gross/Net Ratios are key financial metrics in UK property development finance that assess the relationship between gross development value (GDV) and project costs or net returns. The gross ratio compares GDV to total development costs, including land acquisition, construction, professional fees, and other expenses. The net ratio focuses on the profit or net proceeds remaining after all costs are deducted. These ratios are essential for SME property developers and finance professionals to evaluate project feasibility, optimise loan-to-value (LTV) ratios, and structure capital effectively. Understanding gross/net ratios supports informed investment decisions and facilitates comparison across UK property development projects.
This sits within Performance & Efficiency, reflecting a specific measurement approach that influences how performance, risk, or funding constraints are assessed. It is commonly considered alongside Unit Density/Plot Ratios, as both are closely related measures used to assess similar aspects of performance or risk. In funding terms, Gross/Net Ratios is most commonly encountered in connection with Straight Common Equity within the property development capital stack.
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