Return on Cost (ROC) measures the percentage difference between a development’s Gross Development Value (GDV) and its total costs. Calculated as ((GDV ÷ Total Costs) − 1) × 100, ROC shows the uplift in value achieved relative to the capital invested. In property development finance UK, it is a key indicator for assessing whether a scheme meets required return thresholds for equity investors and lenders. Unlike Profit on Cost, ROC focuses on total value created rather than profit alone, making it useful for comparing development opportunities in varying market conditions.
This sits beneath Project-Level Profitability, introducing a more specific variant of the measure without changing its core interpretation. It is commonly considered alongside Return on Capital Employed (ROCE), as both are closely related measures used to assess similar aspects of performance or risk. In funding terms, Return on Cost (ROC) is most commonly encountered in connection with Participating Above Equity Multiple (e.g. 15x) within the property development capital stack.
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