The key challenge lies in presenting the land as a genuine investment project. This is not about selling land, but about valuing a value-creating project with a clearly defined and managed risk profile. 

Real estate development projects are often housed in dedicated entities to isolate risk and structure financing. This corporate structure naturally leads to a preference for share deals upon exit. Yet such transactions are often treated as straightforward real estate sales. Once the transaction moves to the equity side of the balance sheet, its nature fundamentally changes. It is no longer a simple asset deal, but a full-fledged business transfer. Such transactions call for a combination of financial analysis and project-specific technical and regulatory expertise. 

A Cash-Flow Structure Rather Than a Legacy Asset 

A real estate project company—also known as a Special Purpose Vehicle (SPV) or a development company—derives its value from its development potential rather than from current income, which is often non-existent. Whether the project involves residential development, land subdivision or a commercial real estate project, the company holds land reserves whose value is intrinsically tied to the successful delivery of a future development plan. 

Unlike a traditional investment company, which generates rental income and offers an immediate (or near-immediate, depending on vacancy) yield, a project SPV is best understood as a cash-flow structure in the making. Its value is inherently forward-looking, unfolds over a long time horizon and remains dependent on external technical and regulatory factors. 

The Specificities of Valuation 

Unlike a traditional SME (see LLE, 15 November 2025), typically valued on the basis of an EBITDA multiple (earnings before interest, taxes, depreciation and amortization), the value of a real estate SPV is project-driven. With no operating history to analyze, valuation hinges on the credibility of the development scenario. Several methods may be used:  

• Reverse developer balance sheet (residual method): this approach deducts all costs (construction, taxes, financing costs) as well as the developer’s target margin from projected revenues. The residual amount represents what an operator can afford to pay for the land, and therefore for the company holding it. 

• Scenario analysis: key assumptions (exit prices, costs, timelines) are stress-tested under contrasting scenarios (best case and worst case) to assess value sensitivity. Small changes in assumptions can result in significant valuation gaps. 

• Project DCF (Discounted Cash Flow): for large-scale transactions, discounting future cash flows allows both the time value of money and the project’s risk profile to be explicitly incorporated. 

• Market comparables: observed prices per buildable or saleable square metre, land charges derived from comparable transactions, mainly used as a reasonableness check. 

Combining these approaches makes it possible to arrive at a substantiated valuation that reflects both the project’s technical feasibility and its risk profile. 

Key Focus Areas and Advisory Support 

From the buyer’s perspective, assessing such a target effectively amounts to a full project due diligence. For clarity, due diligence refers to a comprehensive review of a target’s financial, legal and technical aspects prior to a transaction. The main areas of focus include: 

• Land ownership and legal structure: ensuring secure title and clearing any servitudes, options or restrictive covenants is essential. 

• Planning and zoning status: the extent to which permits have been obtained, compliance with planning regulations, and the finality of approvals (absence of appeals) are key value drivers. Timelines and the quality of interactions with the permitting authority are also critical. 

• Technical constraints: beyond geotechnical, contamination or flood risks that may impair profitability, particular attention must be paid to utility access (electricity, water, sewerage) and mobility requirements. 

• Economic viability: the robustness of the business plan must be tested by assessing the realism of exit assumptions and the depth of the local market. 

• Financial and banking structure: the buyer assumes existing debt, guarantees and contractual commitments, which requires complete and consistent documentation. 

The sale of a real estate project cannot be improvised. Too often, owners initiate a sale process without structuring it as a genuine M&A transaction, thereby undermining the project’s credibility in the eyes of investors. 

Given the complexity and interdependence of the issues involved, such transactions go well beyond traditional real estate brokerage. Engaging an experienced M&A advisor therefore becomes a key success factor. In this role, the advisor prepares a structured package (teaser, information memorandum and data room), identifies relevant counterparties and manages a competitive process to establish true market value. An M&A advisor approaches the transaction in terms of enterprise value and risk structuring. The objective is to present the land as a genuine investment opportunity, combining target returns with a clear timeline. This is not about selling land, but about valuing a value-creating project with a clearly defined and managed risk profile.