Property development feasibility in Australia: build a project-specific case

Agree what the feasibility needs to do

If someone asks for a 'feaso', clarify the deliverable behind that informal shorthand. A quick acquisition screen and a detailed case for a construction commitment are different jobs. Agree whether the study should compare uses, test a purchase price, reconcile a design or support a funding conversation. State the information date, site, development entity, intended use and decisions expected from the analysis.

The Australian Property Institute lists feasibility studies and development management as distinct topics in its professional guidance catalogue. The existence of a spreadsheet is therefore not the whole task. Your brief should identify which design, market, cost and delivery questions must be investigated and which professional advice sits outside the financial model. Mark estimated inputs and unresolved facts rather than giving every cell the appearance of equal certainty.

Sources: Australian Property Institute: Guidance Papers: Feasibility Studies and Development Management

Connect site capacity to the relevant planning evidence

Identify the state or territory, council or other relevant authority and the planning instruments affecting the parcel. Retain the source for the proposed use, capacity, access and delivery conditions. Distinguish a concept that appears commercially attractive from a proposal with the required consents. The appraisal should show which assumptions depend on further investigation, design or approval.

As one jurisdiction-specific example, the NSW Planning Portal explains that local environmental plans guide local planning and zoning, while development control plans provide supporting design guidance. Its local-development material also directs applicants to check the consent pathway. This is NSW context, not a national approval sequence. Use the current instruments and competent authority for the actual site, including conditions that may affect infrastructure, staging or the point at which the scheme can operate.

Sources: NSW Planning Portal: Local Development; NSW Planning Portal: Development Control Plans

Build revenue from the proposed product

Prepare a unit and area schedule that reconciles to the design being tested. A townhouse, apartment, subdivision lot and retained rental asset need different revenue and delivery assumptions. For sales, show the unit mix, supported price assumptions, incentives, selling costs and expected settlement dates. For a retained asset, investigate effective rental income, operating expenditure and the eventual refinance or disposal assumption.

Keep contracted presales distinct from completed settlements and cash that can actually be used. A deposit held under a particular contract or account arrangement should not become general construction funding merely because the model records a sale. Ask the legal and finance advisers to confirm the applicable terms. Record comparable evidence by location, property type, size, specification, transaction date and payment basis, rather than relying on a suburb-wide headline.

Test capacity changes against a complete cost scope

Separate land, construction, enabling works, external services, professional and project costs, contingencies and the transaction costs that apply. Confirm the estimate's date, area basis and exclusions. Ask what changes if the design loses a unit: some construction quantities may fall, while land, mobilisation or infrastructure expenditure may stay largely unchanged. A per-unit average can conceal that fixed-cost exposure.

In an invented screen, ten homes at A$1.1m each produce A$11m of assumed revenue. Land is A$3m, construction A$4.5m, professional and project costs A$0.7m, enabling works A$0.3m and contingency A$0.5m. Total cost is A$9m and surplus A$2m before financing and tax. These are arithmetic assumptions, not Australian price or cost benchmarks.

Now test nine homes at the same price, with construction falling only A$0.3m because the revised scope retains fixed components. Hold the other costs unchanged for this test. Revenue is A$9.9m, costs A$8.7m and surplus A$1.2m. Losing one of ten units reduces surplus by 40%. The right response is to investigate the revised design and scope, not assume every budget line falls in proportion to unit count.

Specify tax treatment and settlement cash separately

Create a schedule for each relevant transaction rather than applying one tax setting to the entire model. Ask the tax adviser to confirm the entity, nature of the supply, GST registration position, any applicable margin-scheme treatment, credit entitlement and payment timing. Also identify state or territory transaction and holding costs for the particular ownership and acquisition structure. A template's label is not evidence that its treatment applies.

The ATO's GST-at-settlement guidance explains that withholding may apply to certain property transactions, with an amount paid to the ATO rather than the supplier. Its examples and reporting guidance distinguish withholding from the supplier's final GST liability. The practical modelling consequence is to reconcile the contract price, settlement funds received and tax-account movements. Do not subtract the same withholding as an extra permanent cost and again as the underlying liability.

Record which prices and costs include GST and how any recovery or adjustment enters the cash schedule. A proposed change from sale to rental retention should trigger a fresh review of the assumptions rather than simply moving the last receipt. The feasibility should expose the tax questions and use confirmed project advice; this guide does not supply a universal GST rate or eligibility conclusion.

Sources: Australian Taxation Office: GST at settlement

Issue a case that can survive the next revision

Present the commercial result with peak funding need, the period of the tightest cash position and the conditions that could change the recommendation. Keep the approved design, cost plan and programme beside the model version. Test a later approval, slower settlement or changed construction scope using explicit assumptions. A completed-value estimate should not be counted as available cash without a transaction or financing event that produces it.

RICS' development-property valuation standard is relevant when the instruction includes a valuation, but a developer's feasibility does not automatically fulfil that separate assignment. Agree the appropriate professional scope where a lender or other recipient requires an opinion of value. For the development decision itself, finish with the evidence still required, its owner and the point before which it must be resolved.

Sources: RICS: Valuation of development property