How Much Will Your Development Really Cost? Learn to Calculate Feasibility Like a Pro
Lina Zheng- May 5
- 5 min read
Updated: 1 day ago
If you’re wondering how much it costs to build a house in Australia or searching for the right property development feasibility template to crunch the numbers—you’re not alone. Every successful project starts with one key step: an accurate, professional feasibility study.
Whether you’re planning to build a duplex, townhouse, subdivide land, or start your first home build, the most common mistake is underestimating total project costs—and the consequences can be massive. From budget blowouts and delays to profit loss and bank knockbacks, getting your development cost estimate wrong can derail your entire project.
This guide will show you how to use a feasibility study to calculate your true development costs, building per m², identify hidden risks, and assess if your project stacks up—before you commit.
What Is a Property Development Feasibility Study?
A feasibility study is a structured, strategic evaluation used to determine whether your development is financially viable and profitably achievable. It’s not just a rough estimate—it’s a data-backed decision-making tool.
In Australia, developers use feasibility tools and templates to forecast development and building costs, timelines, risks, and returns. Whether you’re downloading a subdivision cost calculator, searching for a building estimator, or building your own property investment checklist, these tools should always be part of your process.
Why It Matters: Key Benefits of Feasibility Analysis
Before you break ground or apply for finance, your feasibility study helps you:
1. Estimate Development & Construction Costs Like a Pro
Use real data to answer the question: How much does it cost to build a house in Australia? From land purchase to finishes, get an accurate view of total outlay.
2. Test Profitability With Key Metrics
Run margin analysis, calculate IRR (Internal Rate of Return), or compare scenarios using cost estimation tools trusted by professionals.
3. Prevent Budget Blowouts and Delays
Identify soft costs, regulatory red tape, or construction risks early, before they become expensive surprises.
4. Secure Finance With Confidence
In commercial space, lenders often ask for feasibility models. Showing up prepared with a clear property development cost plan makes a strong case.
Key Components to Include in Your Feasibility Report
Here’s what every strong property development feasibility study should include:
1. Site & Planning Assessment
Local council zoning and overlays
Planning, environmental, or overlay restrictions
Access to infrastructure and utilities
2. Market and Demand Analysis
Comparable sales and current supply
Target buyer or tenant profile
Sales velocity and demand drivers
3. Construction & Development Costs
Land purchase, stamp duty, and legal
Town planning, consultants, and approvals
Construction, holding, and exit costs
4. Revenue and Profitability Projections
Gross Realisation Value (GRV)
Sales and rental income forecasts
Break-even analysis and return metrics
5. Financial Models and Sensitivity Analysis
Testing for best/worst case scenarios
Cash flow modelling and funding requirements
Developer equity, finance, and contingencies
Feasibility Frameworks Used by Professionals
Developers use a range of financial models depending on project type and investor goals:
Margin on Development Cost (MDC):
A key metric for smaller residential developments, calculated as (Profit ÷ Total Costs) × 100.
Internal Rate of Return (IRR):
Measures the annualised rate of return across the life of the project. Commonly used in large-scale and long-term projects.
Net Present Value (NPV):
Consider the time value of money by discounting future cash flows. Preferred by institutional developers and lenders.
Payback Period:
Assesses how quickly the initial investment can be recovered. Particularly useful in early-stage project comparisons.
Return on Investment (ROI):
Measures the overall return generated on the total capital invested. Calculated as (Net Profit ÷ Total Investment) × 100. Commonly used to compare profitability across multiple projects.
Common Mistakes Developers Make Without Feasibility
Underestimating Total Costs – Especially when soft costs like DA fees, council’s contributions, or the consultant's site reports are overlooked.
Overestimating End Value or Sales Rates – Optimistic assumptions can undermine ROI.
Ignoring Regulatory Hurdles – Rezoning, DA delays, or overlays can cause months of holdups.
Failing to Include Contingency Buffers – Every project should account for unexpected cost variations.
Using Generic or Outdated Data – Feasibility is only as accurate as the inputs.
Estimating Costs Like a Pro: Tools and Best Practices
Experienced developers rely on a combination of digital tools and expert advice to run feasibility:
Construction Estimators and Cost Guides: To benchmark per sqm costs for different dwelling types.
Feasibility Software and Excel Templates: For inputting financial models and running scenarios.
Council Planning Portals: To confirm zoning, overlays, and submission timelines
Professional Support: From quantity surveyors, town planners, and development managers.
From Numbers to Strategy: What to Do After Your Feasibility Is Complete
Once your feasibility study indicates the project is viable, it becomes the foundation for:
Securing Funding
Structuring Contracts and Consultant Engagements
Planning Sales or Leasing Strategy
If the numbers don’t stack up? It’s a signal to adjust your assumptions, negotiate better land prices, reduce development & construction scope, or simply walking away could be your best decision.
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What You’ll Learn
In this value-packed webinar, you’ll discover:
1. How to Lock in Realistic Costs Early
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Using industry-standard estimating tools
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Most projects suffer endless variations due to vague contracts and poor planning. You’ll learn how to:
Write watertight scopes of work
Avoid common pitfalls in tendering
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Time is money. Adam reveals proven techniques to:
Create a professional construction timeline
Use site control strategies that work
Prevent builder delays and excuses
4. Tools the Pros Use (That You Can Too)
We’ll give you a peek inside the SUPER-PORTAL:
Feasibility & cost calculators
Project management dashboard
On-demand expert support
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Considering a dual occupancy project as part of your development strategy?
Once you've crunched the numbers with a feasibility study, your next step might be to explore how to maximise land value through multi-dwelling designs. Check out our Complete Guide to Dual Occupancy Homes for practical insights on designs, council approvals, and investment returns in 2025.
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