This is an area where we suggest investors spend quality time. The three main costs are: one, the land costs (based on the new investor’s cost basis) and importantly the cost per square meter of net sellable area; two, construction costs; and three, development costs. It is important to measure the costs of the net sellable area and factor swaps, trades of cash for units or air rights, as an investor calculates the total costs per square meter to replace the unit. These replacement costs are the foundation of the analysis. This analysis allows an investor to understand how defensible the margins of the project are.
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