What a feasibility actually is
A property development feasibility answers a single question: does this project make money, and if so, how much? Everything else — the inputs you collect, the structure you build, the outputs you read — exists in service of that question.
A good feasibility is structured, defensible and quick to update. A bad one is a 47-tab spreadsheet that the analyst who built it has just left the company.
The inputs
Every residential feasibility relies on the same five input groups:
- Site — address, lot size, zoning, allowable GFA.
- Scheme — number of dwellings, mix, average size, car parks, levels.
- Revenue — per-unit pricing, selling costs, GST treatment.
- Costs — land, construction, fees, contributions, contingency.
- Finance — equity, debt, rates, drawdown profile.
Inputs are where most feasibility errors originate. Pricing pulled from comparable sales over three months old, construction rates from your last project two years ago, contributions from a schedule that's since been updated — each one quietly distorts the result.
The outputs that matter
The output set every Australian residential developer reads is the same:
- GRV — total revenue.
- TDC — total cost.
- Profit on cost — the headline ratio (target 18–22%).
- Development margin — profit divided by revenue (target 15–20%).
- Equity IRR — annualised return on equity.
- Peak debt and peak equity — read off the cashflow.
If your model can't produce all six on demand, it's not finished.
Scenarios and sensitivities
A single number is a guess. A range is a feasibility. Run scenarios for the realistic upside and downside on revenue, cost and timing — and read all of them side by side. Sensitivities (±5% on revenue, ±100bps on rate, 3-month delay) tell you which lever the project is actually exposed to.
Common mistakes
- GRV not net of selling costs and GST.
- Construction rate from a different cycle.
- Contingency forgotten or under-provided.
- Annual cashflow only — peak debt under-stated.
- DM fee inconsistently treated.
- Sensitivities run only on revenue.