Total development costs (including sufficient profit for the developers) are S874/m2 (persquare meter) . Investors are willing to pay property prices of S22.38 per dollar of currentrental income. What is the replace cost rent in this market? Oa.S43.07/m2 $33.58/m2o b ocS27.45/m2 S41.78/m2O d O e.$39.05/m2
Question
Total development costs (including sufficient profit for the developers) are S874/m2 (persquare meter) . Investors are willing to pay property prices of S22.38 per dollar of currentrental income. What is the replace cost rent in this market? Oa.S43.07/m2 39.05/m2
Solution
The replacement cost rent in this market can be calculated by dividing the total development costs per square meter by the amount investors are willing to pay per dollar of current rental income.
So, the replacement cost rent would be 22.38 per dollar of rental income.
Replacement cost rent = 22.38/dollar = $39.05/m2
So, the replacement cost rent in this market is:
e. $39.05/m2
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