How property developers screen sites before bidding

Short answer. A good site screen runs seven checks before any modelling, takes about an hour, and produces a yes, no or escalate decision. Most sites that land in your inbox should be a no inside fifteen minutes.

What screening is, and what it is not

Screening is a pre-feasibility filter. It is faster than a feasibility, lighter than due diligence, and stricter than gut feel. The job is to spend ten percent of the effort and eliminate ninety percent of the deals that would have failed anyway.

The seven screening checks

1. Strategic fit

Before any numbers, check the deal fits your mandate. Suburb, typology, price band, stage of cycle. If you are a townhouse developer being offered a 22-storey apartment site, the answer is no, regardless of the RLV.

2. Zoning and overlays

Pull the planning certificate. Check the zone, FSR, height, heritage, flooding and bushfire overlays. Each one materially changes the scheme or the cost of building it. A 25 percent affordable housing inclusion zone is not a small detail.

3. Allowable GFA

Multiply lot area by FSR. Subtract a sensible efficiency loss (typically 12 to 18 percent of GFA goes to lobbies, services and circulation). What is left is your saleable area. This single number drives almost every downstream output.

4. Comparable sales

Pull the last three months of completed sales in the suburb. Filter by typology and bedroom count. Take the median, not the average. If you cannot find five recent comps, the suburb is either thin or you are pricing into uncertainty.

5. Construction rate

Use the most recent rate from your QS for this typology, in this region, at this scale. Industry averages are useful as a sanity check, never as the input. A two-year- old rate from a different cycle is the second-most common source of feasibility error, after stale pricing.

6. Statutory contributions

Council Section 7.11/7.12 (in NSW) or equivalent state schedule. Check the schedule is current. Some councils update annually, others change overlays mid-year. Treat any contribution number older than the current financial year as a guess.

7. Residual land value

With the six inputs above, run a quick residual land value at your target profit on cost. Three hurdles (say 18, 20, 22 percent) and a range of values. If the asking price is above the 18 percent RLV, the answer is probably no. If it is below the 22 percent RLV, you have negotiating room.

Common screening mistakes

• Pricing optimistically. The temptation is to push the unit price up to make the deal work. The right move is to push it down to test whether it survives a softer market.
• Ignoring efficiency loss. Quoting GFA as saleable. Saleable area is always less than GFA. The gap is real money.
• Skipping the contributions check. Stat charges can move a deal by ten to fifteen percent of cost. They are not a rounding error.
• Treating RLV as a single number. RLV is a range across hurdles, not a point estimate. A 2-percentage-point change in target profit on cost can move RLV by 10 to 20 percent.

A worked example

Sydney inner-west site, 1,200 m² lot, FSR 1.8, height 18m. Mid-tier residential zone, no heritage, no flooding.

• Lot area × FSR = 2,160 m² GFA.
• Saleable area at 85 percent efficiency ≈ 1,835 m².
• Median sale ≈ $14,500 per m² saleable for a comparable scheme.
• GRV ≈ $26.6M, net realisation ≈ $23.1M after selling costs and GST.
• Construction at $5,200 per m² GFA ≈ $11.2M, plus fees, contributions and finance.
• RLV at 20 percent profit on cost ≈ $4.0M to $4.4M depending on contributions.

If the asking price is $5.0M, the deal does not screen in. If it is $3.8M, it is worth a full feasibility. The hour you spent saved you a week.

Practical takeaways

• Screen before you model. Most deals should die in an hour.
• Always run RLV across at least three hurdles, never a single point.
• Use the current construction rate, never a rate from a different cycle.
• Contributions are not a rounding error.