Highest and Best-Use Study

Highest and Best-Use Study

According to The Uniform Standards of Professional Appraisal Practice, 2002, highest and best use is defined as “The reasonably probable and legal use of property that is physically possible, appropriately supported, and financially feasible, and that results in the highest value”.  

Every asset is unique and has a development and financial potential attached to it at a particular given time period. The assets can be a vacant land, old construction, heritage building or a non-operating industry/factory. The question lies in determining that highest and best use of the property within the gamut of set regulations and market dynamics.

As the name suggests, highest and best use study is a detailed exercise to arrive the most feasible aspect. The exercise involves drilling down from all possible options of development to the best option which fetches highest returns on the investment.

Four tests are conducted on the asset to determine the suitable Highest and Best Use. These tests are applied correspondingly.

  1. Be legally permissible,
  2. Be physically possible,
  3. Be financially feasible and
  4. Be maximally productive

We incorporate our market intelligence, knowledge and experience to arrive at the most feasible option and product mix. We analyse the site on the basis of technical and architectural design aspects which helps formulate few options of development. These options are thoroughly analysed within the prevailing market dynamics and further zeroed down to the financially viable option.

The highest and best use study is a detailed exercise which requires thorough understanding of regulatory, legal, architectural, planning and financial aspects of real estate and project formulation.

The exercise can be broken into following segments which in self are detailed exercise and require explicit knowledge and experience.

  • Location analysis
  • Site analysis
  • Regulatory feasibility
  • Design feasibility
  • Market feasibility
  • Financial feasibility
  • Final Recommendation