An extract from the case Min of Pub Instruction v Turner [1955] SR (NSW) 310. The Court at page 318 stated the following regarding the profit and risk factor for the market value of in globo land:

Where unsubdivided land is suitable for subdivision and no proper guide to its value as unsubdivided can be obtained from sales of comparable land, a familiar method of valuation which has regularly been used in New South Wales for many years is to assume that the land was subdivided by the most suitable method of subdivision and to ascertain, by reference to comparable sales of allotments similar to those into which it was assumed to be subdivided, what it should be expected to bring on the market by sale in sub-division. An estimate is then made of the costs involved in effecting the subdivision and of the length of time which it would take to realize the land in subdivision. Provision is then made for charges such as rates and taxes which would be incurred during the time up till realization, and provision is made for interest on to the purchase price, and the outgoings required to put the land into subdivision and sell it. In this manner an estimated net return to a subdivider is ascertained. It is, however, quite clear that that estimated net return is not the value of the land as at the date of resumption. No purchaser would acquire land at the present money value of that figure. Reasons for this are set out in part in the judgment of the Judge of the Land and Valuation Court, which is annexed to the case stated and also in other cases in the Land and Valuation Court, including Closer Settlement Ltd. v. The Minister (1913) 18 CLR 654. Shortly stated, they are that many factors in the calculation are speculative, the time taken to realize the land may be longer than was estimated, unforeseeable difficulties may arise in respect of the sales of particular lots or all lots in the subdivision, the prices are estimates only, conditions may change in some or all respects before the time for sale arises, and the costs involved in effecting the subdivision may prove to be greater than is estimated. A purchaser considering buying land for the purpose of subdividing it would necessarily require a margin between the purchase price of the land and the expected or estimated net return on realization of it in subdivision and this fact was recognized in this case. The extent of the margin, that is the difference between the purchase price which a purchaser would be prepared (p319) to pay for land in globo and the net return expected to be derived from it on sale in subdivision is a matter to be ascertained from the opinions of experts based upon their experience and their analyses of transactions of this type. It is frequently referred to as the allowance for risk of realization, although that expression is sometimes, as in this case, used in a more restricted and different sense. The margin required by a purchaser may be regarded as comprising two distinct elements firstly an evaluation of the risks involved in the process of obtaining the net return, that is the risks that the estimated net return will not be realized, and secondly, a provision for the purchaser to make a profit on the whole transaction.

The purchaser would require that if the net return less the provision for the anticipated risk were realized he should make a profit on the transaction, that is, that his enterprise in risking his money in a venture that contains many elements of speculation should be rewarded. It is not to be assumed from this that every purchaser of land in globo who thereupon puts it into subdivision and sells it in that form necessarily makes a profit. Experience has shown that this is not so because sometimes the risk of realization proves in fact to be much greater than the provision which it was proper and reasonable to make as to it at the time of the acquisition of the land in globo. It is, however, established, and found to be the fact in this case, that a hypothetical purchaser acquiring land in globo for the purpose of subdividing it would not pay a price which left him no estimated margin for a profit as well as for the risk involved. How the dissection of sales of subdivisible land in globo can show to what extent the margin between the estimated net return on subdivision and the amount for which the land was sold comprises on the one hand a true evaluation of the risks involved, and on the other an estimated profit, we do not know but the two elements have been separated in this case and this Court is concerned only with the facts as found. The evaluation in money of the risk involved is something which must be taken away from the expected return from the land before a true net return is arrived at; because it is the money estimate of the amount by which the estimated return will not in fact be realized. It has been referred to as the risk of realization in the judgment below, and we shall use that term hereafter in this judgment to indicate the true element of risk as distinct from the element of profit in the margin to which we have referred.