How do you assess the value of a (multi-family) construction project?
For unbuilt, but approved, projects, there are rarely any good comps. There aren't enough of these sold on the public record. 

I do a valuation by capitalization then deduct the builder's costs and build in 20% margin (the industry standard according to my experience and a reliable government source). The remainder is the sale price of the unbuilt project.

I also check that the value of the project being sold relative to the value of the completed asset is roughly in line with a basket of the most similar projects I can find in the sale record. 

What's your method?
[{"id": "g8ojmc2", "text": "The best way to do it is to underwrite a discounted cash flow statement. Project the untrended NOI on a stabilized basis then divide by whatever the yield on cost is these days (I\u2019m guessing around 6-7%, I don\u2019t work in the development world anymore). \n\nIt\u2019s similar to applying a cap rate to a stabilized property.", "replies": [{"id": "g8pkn1t", "text": "Yield on cost for investment grade tenants is around 7%. I know he needs MF but thought I'd chime in", "replies": [], "depth": 2}, {"id": "g8pq0ft", "text": "6-7% is about right from what I\u2019ve seen", "replies": [], "depth": 2}], "depth": 1}, {"id": "g8oyq5y", "text": "I think the value of an un-built project is more closely related to the value of raw land than it is to a completed building. Getting the MUP takes some work, and costs some money, but it's a developer that will buy it - not the same buyer as for a stabilized asset. It's a more niche market.   \n\n\nThat being said, I prefer to go the cost route; take the value of the land, add on the cost of obtaining the MUP, and add on the extra value for the MUP (which is almost entirely dependent upon how long it takes to obtain one). The major reason I prefer this route is because there are FAR fewer variables then for when you are valuing it as a completed stabilized asset: estimating cost of labor, cost of financing, cost of materials, and then all the estimates on the value of the completed project, price/unit, price/RSF, CAP rates, GRM, rental rates, vacancy rates, operating expenses. Ask three brokers for the value of a stabilized property and you'll easily get variances of something like 5%, ask three developers for the cost of a project and you'll get estimates that are easily 20% apart from one another if not more. Those estimates compound when you've estimating the value of permitted land based on an un-built stabilized project. My 2 cents at least.", "replies": [{"id": "g8p683b", "text": "Yeah that be my approach to value as well. What OP is describing is more how I'd go about it as a feasibility study or a land residual analysis to estimate what a developer can afford to pay for a site and still meet their return requirements.", "replies": [], "depth": 2}, {"id": "g8pbcf1", "text": "\"add on the extra value for the MUP\"\n\nThat's the hard part. \n\nHow do you estimate that? \n\nFrom what I can see in my records, the value of the MUP is  confounded by the desirability of the project. One builder dropped $400K on approval soft costs and design. Design was overkill. It would cost $2Mil more to build than to buy. That's an extreme example, but it makes the point: there are other factors that can make it difficult to tease out the value of the MUP from the records.", "replies": [{"id": "g8pd71f", "text": "I'd get a gauge from $/SF of permitted comps vs unpermitted comps and tease out a rough value for your area. It does depend on the MUP itself though, I've seen some that fully utilize the available space, and others where the architect didn't even realize that a daylight basement square footage didn't count against the total buildable square footage and the plans didn't fully utilize the land by nearly 20%.", "replies": [], "depth": 3}, {"id": "g8pkefk", "text": "The value is also a function of risk and time. A fully entitled project **should** be worth more than raw land - someone has taken the entrepreneurial initiative to get it designed and permitted! All you have to do is press go! \n\nBut it's obviously more complicated than that. A starting point is why is the project available at all? Why isn't the existing developer moving forward? Financing, partner issues, cost, etc. are all relevant to the analysis there. Does the project require significant redesign (costs time), or are further approvals necessary (adds risk), does the market accommodate developers or are approvals hard to come by, is there an unusual holding period, etc. \n\nThese are all qualitative questions that can be hard to put a dollar value on, but I think the answers tend to point you in the right direction for how to value premiums/discounts to the entitlements/land residual.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "g8p8t7i", "text": "In my area value is almost entirely dependent on the number of units that are permissible. That becomes the unit of measure when looking at sales comps.", "replies": [], "depth": 1}, {"id": "g8rj62g", "text": "PV of future cash flows", "replies": [], "depth": 1}, {"id": "g8roqtn", "text": "Good ideas mentioned here. In California the yield on cost is in the 4 to 6 pct range depending on the location. The value is created in the entitlement phase. Developers try to earn a 20pct return which is a 100 basis point spread between your development cap and the market cap. The best ones I know use a method called the land residual wherein you back into the most you can pay for your land and still make your desired return on cost. If you are transparent and honest with the landowner they might buy into the logic of your analysis. The urban land institute has good classes and books on the subject.", "replies": [], "depth": 1}]