Financial & Feasibility

• Gross Realisation Value (GRV)

the total expected revenue from selling or otherwise realising the completed development. For a residential development, GRV is generally the combined expected sale value of all completed dwellings.

• Net Realisation Value (NRV)

the total expected revenue from a completed property development after deducting selling costs and other costs directly associated with realising that revenue (typically GST).

• Total Development Cost (TDC)

the total cost required to acquire, develop, finance and complete a property development. It typically includes the land acquisition cost, construction costs, professional fees, statutory fees, service authority fees, finance and holding costs, marketing, sales costs and contingencies.

• Development Margin

the profit generated by a property development calculated by deducting the Total Development Cost (TDC) from the Net Realisation Value (NRV). It represents the developer's expected gross profit from the project before considering tax and other items outside the feasibility model.

• Profit on Cost

the development profit expressed as a percentage of the total development cost. It is commonly calculated as development profit ÷ total development cost × 100 and is a key measure of development feasibility.

• ROE — Return on Equity

measures the profit generated on the equity capital invested into a development project. It is particularly useful for understanding the return achieved by the developer's or investor's own capital.

• RLV — Residual Land Value

the maximum amount a developer can theoretically pay for a development site while still achieving the required return on the project (typically 15% return on cost). It is calculated by deducting total development costs and the required developer's profit from the estimated end value of the completed development.

• IRR — Internal Rate of Return

the annualised rate of return a development project is expected to generate over the period of the investment, taking into account the timing of project cash flows. IRR is commonly used to assess and compare the investment performance of property developments.

• NPV — Net Present Value

measures the current value of a development project's future cash flows after accounting for the required rate of return. A positive NPV generally indicates that the project is expected to generate a return above the required investment threshold.

Development Costs

• Hard Costs

the direct physical costs of constructing and delivering a property development. They typically include building works, demolition, civil works, external works and landscaping.

• Soft Costs

development expenses that are not directly related to physical construction. They commonly include consultants, architects, town planners, engineers, legal fees, surveying, approvals and other professional costs.

• Contingency

an allowance included in a development feasibility to cover unforeseen or unexpected project costs. It is typically calculated as a percentage of relevant development costs and provides a buffer against cost overruns.

• Holding Costs

ongoing costs incurred while a property or development site is held before the project is completed or sold. They can include land interest, rates, taxes, insurance, security, utilities and other property-related expenses.

• Finance Costs

the costs associated with borrowing money to fund a property development. They typically include interest, loan establishment fees, valuation fees, lender fees and other financing charges.

• Development Contributions

charges imposed by government or authorities to help fund infrastructure or services required as a result of development. Depending on the project and location, these may include development contributions, infrastructure charges or other statutory contributions.

Planning & Development

• Site Yield

the number and type of development outcomes that can potentially be achieved on a property, such as the number of residential lots, townhouses or apartments. Site yield is influenced by planning controls, site dimensions, access, design requirements and physical constraints.

• Gross Floor Area

the total floor area of a building measured including any covered carparking areas, balconies and trafficable rooftop spaces. It is commonly used to assess the scale and intensity of a proposed development.

• Floor Area Ratio

the ratio of a building's total floor area to the area of the site. For example, a FAR of 1.5 on a 1,000m² site would allow for 1,500m² of floor area, subject to applicable planning controls and other constraints.

• Development Overlay

a planning control that applies additional requirements or considerations to development on affected land. In Victoria, overlays can regulate matters such as development design, environmental constraints, heritage, vegetation, flooding or other site-specific considerations.

• Planning Permit

a legal approval issued by the relevant planning authority that allows a specified use or development to occur on a property, subject to conditions. Whether a planning permit is required depends on the property's zoning, overlays and the proposed development.

• Development Approval

formal approval from the relevant authority (typically local council) allowing a proposed development to proceed, subject to applicable conditions and requirements.