Property Development Feasibility: The 10 Metrics That Make or Break Your Project
The 10 Critical Metrics Every Developer Must Track
Property development is a numbers game. The developers who consistently make money aren't luckier — they're more disciplined about tracking the right metrics before committing capital.
Here are the 10 non-negotiable numbers you need for every project.
1. Gross Development Value (GDV)
What it is: The total estimated value of your completed development if sold at market prices on day one.
How to calculate: Number of sellable units × expected selling price per unit (based on conservative comparable evidence).
Why it matters: This is the ceiling of your entire financial model. Every other metric flows from this number. Overestimate GDV and everything downstream is compromised.
2. Total Development Cost (TDC)
What it is: The sum of ALL costs to deliver the project from acquisition to handover.
Includes: Land acquisition, construction, professional fees (architect, engineer, surveyor, town planner), statutory fees (permits, contribution levies), finance costs, marketing and sales, holding costs, contingency, and GST/VAT.
Typical range: 75–85% of GDV for a well-structured project.
3. Development Margin
What it is: Net profit as a percentage of GDV.
Formula: (GDV − TDC) ÷ GDV × 100
Industry benchmark: 15–25% for residential developments in Australia. Below 12% is generally considered too thin for the risk involved.
4. Return on Cost (RoC)
What it is: Profit as a percentage of total cost.
Formula: Net Profit ÷ Total Development Cost × 100
Why it's different from margin: Margin measures profit against revenue (GDV). RoC measures profit against your investment. A 15% margin typically equals around 18–20% RoC depending on the cost structure.
5. Residual Land Value (RLV)
What it is: The maximum you can pay for the land while still achieving your target profit margin.
Formula: RLV = GDV − TDC (ex. land) − Target Profit
Usage: Tells you whether the asking price for a site is viable before you spend money on due diligence.
6. Internal Rate of Return (IRR)
What it is: The annualised rate of return that accounts for the timing of every cash inflow and outflow throughout the project lifecycle.
Why timing matters: Two projects with the same net profit can have very different IRRs if one takes 18 months and the other takes 36 months. IRR rewards speed.
Industry benchmark: 18–25% for residential development projects.
7. Net Present Value (NPV)
What it is: The value of all future cash flows discounted back to today's dollars using your cost of capital.
When it's positive: The project is expected to generate returns above your cost of capital. When comparing multiple sites, choose highest NPV.
When it's negative: The project destroys value — even if it shows a nominal "profit" in dollar terms.
8. Peak Debt
What it is: The maximum amount of borrowed capital outstanding at any single point during the project.
Why it matters: Lenders will look at this number when assessing your facility. A higher peak debt means higher interest costs and greater risk exposure.
Optimisation: Phasing your construction to draw down progressively instead of all-at-once can reduce peak debt by 10–20%.
9. Cost-to-Value Ratio
What it is: Total development cost as a percentage of GDV.
Formula: TDC ÷ GDV × 100
Rule of thumb: Keep this below 80% for residential and below 85% for commercial. Every percentage point above 80% means your margins are getting squeezed.
10. Sensitivity to Cost Overruns
What it is: How much your margin shrinks for each 1% increase in construction costs.
Typical impact: On a standard 18% margin project, every 5% construction cost overrun wipes approximately 3–4% off your margin. A 15% overrun would eliminate your profit entirely.
Best practice: Always include 5–10% contingency AND run sensitivity tables showing what happens at +5%, +10%, +15%, and +20% cost scenarios.
Running All 10 Metrics Instantly
FEEZO calculates all 10 metrics in under 10 milliseconds. Change any assumption and watch every KPI update in real time — including sensitivity tables that show exactly how your margins survive cost overruns.
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