Case study — industrial land at Had Soualem: when comparables run out, the residual method takes over

A rate per square metre picked up here or there, stripped of the terms that produced it, is not a comparable: it is a rumour with a number attached.

1. The context (anonymised case)

Our client, a Moroccan industrial group, had held for several years a bare landholding in an industrial zone in the southern belt of Casablanca, acquired at the time with a site extension in mind that was never activated. The land has remained in reserve: fenced, minimally maintained, bounded by a road serving the neighbouring plots, but with no internal servicing of its own.

• Situation — a logistics and industrial sector structured around the road flows linking Casablanca to its hinterland, where processing, storage and distribution units have established themselves.
• Condition of the asset — bare land, broadly level, with no building or dedicated equipment, services present at the boundary of the zone but no effective connection.
• Purpose of the instruction — to arbitrate between holding, selling as a whole and adding value through subdivision, and to hold a sound valuation basis for internal governance and for a possible funding discussion.

2. The brief and its constraints

• A market value of development land — the client was not after a conversational order of magnitude but a documented, traceable and defensible value, produced in a structured report meeting the formal requirements of the Red Book (VPS 3) and the principles applicable to development land (IVS 410, expressed on the RICS side by VPGA 10).
• Two use scenarios to compare — a block sale to a single operator, or subdivision into industrial plots marketed separately. The instruction required both to be worked through, without presupposing which would be adopted.
• A reading of the holding cost — the land being bare and unused, the client wanted to understand what waiting was costing, in particular the annual charges attaching to unbuilt urban land, and how that carrying cost fits into a value argument.
• No accommodation — an old internal estimate was circulating within the group; the terms of engagement stated expressly that the valuer would not treat it as an anchor.

3. The challenges specific to the asset

• Scarce and barely usable comparables — in industrial land, transactions are few, often agreed privately between professionals, and their real terms (payment periods, works borne by the seller, servicing undertakings) are not public. A rate per square metre without those terms is not a comparable.
• Heterogeneous plots — within the same zone, a corner plot served by a heavy-duty road and a landlocked plot in the second row share neither market, nor buyer, nor possible use. Size itself distorts the comparison: large holdings address a restricted number of operators and carry a liquidity discount that small plots do not.
• Zoning rules that decide the outcome — permitted site coverage, maximum height, setbacks and building lines, permitted or prohibited uses: these rules fix the buildable volume and therefore, mechanically, what an industrialist can hope to draw from the land. Two neighbouring plots classified differently are not worth the same.
• Servicing, the item most often underestimated — services at the boundary do not amount to a connection: internal roads, the water network, the electrical capacity actually available and, above all, the handling of effluent — industrial drainage obeys its own constraints and may impose on-site pre-treatment, with costs and lead times a buyer builds into its offer.
• Ground-bearing capacity — for industrial buildings carrying heavy operating loads and heavy-duty floor slabs, the quality of the ground dictates the type of foundation. Poor ground does not make the land unbuildable; it makes building on it dearer, and that difference feeds straight through into what the ground itself can be worth.
• Heavy goods access — the geometry of the entrance, turning circles, room for an articulated lorry to manoeuvre, the capacity of the service road, the distance to the structuring routes: a logistics asset inaccessible to heavy vehicles loses most of its interest.
• Land tenure — the title, the actual measured area, easements, but also the feasibility and timetable of a subdivision: dividing up presupposes a procedure, a plan and lead times, whose duration weighs on the present value of the subdivision scenario.

4. The methodology, step by step

In the absence of directly transposable comparables, the instruction was built around a residual argument — the development appraisal — with comparison still present, but relegated to its proper role: that of a sense-check.

• Stage 1 — legal and tenure framing: examination of the title, of the measured area, of the boundaries and of any easements; verification that the legal perimeter and the physical perimeter observed on site agree. Every uncertainty was handled as an explicit assumption, stated as such in the report, without standing in for the checks that fall to legal advisers.
• Stage 2 — reading the zoning and the applicable rules: permitted uses, site coverage, height, setbacks and parking requirements. It is that reading which determines the deliverable scheme — the floorspace an operator can actually build — and not the owner's intentions.
• Stage 3 — site visit and technical diagnosis: topography, apparent nature of the ground and the lessons of the available geotechnical investigations, presence and real capacity of the services at the boundary, configuration of the access and suitability for heavy goods movements. These findings feed directly into the cost side of the appraisal.
• Stage 4 — building the scheme and the scenarios: definition of a realistic industrial project — an activity building and its manoeuvring areas — then its expression in two scenarios, a block sale to a single operator and a subdivision into serviced plots, each with its own delivery and marketing timetable.
• Stage 5 — the residual appraisal itself: from the value of the completed and marketed scheme are deducted all the expenditures needed to reach it — servicing and connection works, earthworks and foundation adaptations linked to ground-bearing capacity, construction costs, professional fees and technical charges, finance and marketing costs, taxes and the cost of carrying the land — together with a margin rewarding the risk assumed by the operator. The balance is the land value: what the ground can bear, not what the owner would wish to obtain from it.
• Stage 6 — discounting and the treatment of time: the scenarios do not produce their receipts at the same moment. Subdivision presupposes a division procedure, servicing works and then a marketing programme spread over time; a block sale is quicker but addresses a narrower market. The cash flows were therefore discounted over their own timetables, so that the two strategies could be compared at the same date.
• Stage 7 — comparison as a sense-check: the few usable market references — asking prices tracked over time, transactions cross-checked with operators, available administrative values — served to test the plausibility of the residual result, never to set it. A gap between the two readings is not an error: it is a signal to be explained, and the report explains it.
• Stage 8 — sensitivities and drafting: the report sets out the effect on the land value of a variation in servicing cost, of a longer marketing period and of a tightening of effluent treatment requirements. It is drafted to the formal requirements of the Red Book (VPS 3) — purpose, basis of value, assumptions, limitations, sources — within the logic applicable to development land (IVS 410 / VPGA 10), and signed by RICS-certified experts.

5. The outcome (qualitative)

The report revealed a significant gap with the initial internal estimate circulating in the group: that estimate reasoned in terms of a rate per square metre of serviced land, whereas the holding was not serviced and the necessary works — internal roads, connections, effluent treatment, foundation adaptations — would have to be borne by the buyer and therefore deducted from the price it could offer. More importantly, the comparison of the two scenarios reversed the initial intuition: subdivision, instinctively perceived as the more rewarding route, proved more demanding in capital, in lead times and in marketing risk, which the discounted argument made visible. The client obtained a defensible value, traced item by item and documented and verifiable line by line, and repositioned the discussion onto the terms of a sale rather than on the headline price alone. No amounts are given here: servicing costs, lead times and market conditions vary from one zone and one period to another.

6. The lessons

• The absence of comparables does not license approximation — it requires a change of method, not a lowering of standards. The residual appraisal is heavier to build, but every one of its items can be discussed with the papers in hand.
• The zoning rules are the first determinant of value — site coverage, height and permitted uses fix the deliverable scheme; everything else follows from them.
• Services at the boundary do not mean serviced land — the cost of connection and of industrial effluent treatment is an appraisal item in its own right, and one of those that weigh most heavily on the land value.
• Ground-bearing capacity and heavy goods access are not technical details — they determine the construction cost and the circle of possible buyers.
• Subdividing is not mechanically more profitable — a subdivision adds procedures, works, time and marketing risk; only a discounted comparison can settle the question.
• Holding has a cost — the charges attaching to unbuilt land and the capital tied up belong in the argument: keeping the asset is never a neutral option.

7. What the report is for

The conclusions rest on named assumptions, cited sources and a stated methodology, which makes them documented and verifiable line by linerather than defensible in a block. This is a private valuation: it informs a decision and an arm's-length negotiation. Our reports are prepared by RICS-certified experts and comply with Red Book standards.

ReaConsult has been advising industrial groups, landowners and investors since 2019, with more than 5,000 valuations completed, offices in 6 cities and a rating of 4.9/5 across 47 reviews. Our valuations start at 3,500 MAD excl. tax for standard assets; a residual valuation of industrial land is a specialist instruction quoted case by case. Firm quote within 24 hours, delivery in 5 to 8 days, 48-72 hours on the express service.

Note: this case study is anonymised and strictly methodological — a typical case drawn from real instructions, in which no detail allows a client, a plot or a transaction to be identified. The figures of the instruction are not disclosed: servicing costs, construction costs, lead times and market conditions depend on prevailing conditions, on the zone and on the characteristics of each holding. Questions of zoning, subdivision, land charges and authorisation fall to the competent authorities and advisers. The value of a real site always follows from a case-by-case analysis conducted on documents and on site. To instruct us, see our contact page or the property blog.