$6.$ A brownfield site located in the city centre of Bristol has outline planning permission for the development of an industrial distribution centre with a gross internal floor area of $4,600$m$2.$ Local market evidence suggests that rents for similar units would be $160/$m$2$ and that investment yields would be in the region of $9\%.$ The site is available for purchase at

$1,350,000.$ Your client has expressed interest in acquiring the site conditional to the development achieving at least $20\%$ profit on cost$.$

It is anticipated that construction costs will be $850/$m$2.$ A provisional sum of $200,000$ has been estimated for necessary site preparation and infrastructure costs. The construction period is estimated to be six months, with a lead period of three months to obtain planning permission. There is great interest from logistics occupiers for such a development. It is therefore expected that a pre$$let agreement could be achieved. It is further assumed that:

$$ Interest rate $8\%$

$$ Purchase costs $5\%$

$$ Sales agent and legal fee $2\%$

$$ Land acquisition costs $6\%$

$$ All Professional fees $(\%$ of construction costs$)12\mathrm{.}5\%$

$$ Space efficiency $100\%$

$$ Scheme will be fully let and sold at end of construction.

As a development analyst, advise your client on the project$$s feasibility referring to:

i$)$ Profit on Cost

ii$)$ Profit on Gross Development Value

iii$)$ Rental Cover

iv$)$ Profit Erosion

Show all your workings. Clearly state and justify any additional assumptions you have made.