Ratio of net operating income to the development cost expressed as a percent.
It acts as an indicator of the possible income value while accounting for the cost of developing the project. It is a useful approach to calculate the difference between the market yield and the actual yield of an investment. The common range of development yield for a typical project is between 0% and 15% (may not be applicable for a partial floor area of a project).
How this is calculated
Development Yield is calculated as a percentage of NOI over total development cost.
Formula:
Development Yield = (NOI ÷ Total Development Cost) x 100%
Applied to multiple places in the financial model for example:
All buildings - All Parcels
Per commercial use type - Parcel 1
Per residential use type - All Parcels
Other Equivalent Terms
Yield on Cost