What development margin does this project produce?
Turn land, construction, finance and revenue into development profit and margin in seconds. A quick feasibility check before you build the full model.
Revenue
Costs
Equity (optional)
Scenario matrix
Development margin as gross realisation and total cost each move. The ringed cell is your current inputs.
| GRV / cost | Cost -10% | Cost -5% | Cost Base | Cost +5% | Cost +10% |
|---|---|---|---|---|---|
| GRV -10% | 15.5% | 10.8% | 6.1% | 1.4% | -3.3% |
| GRV -5% | 19.9% | 15.5% | 11.1% | 6.6% | 2.2% |
| GRV Base | 23.9% | 19.7% | 15.5% | 11.3% | 7.0% |
| GRV +5% | 27.6% | 23.5% | 19.5% | 15.5% | 11.5% |
| GRV +10% | 30.9% | 27.0% | 23.2% | 19.3% | 15.5% |
Margins move quickly with revenue and cost. Profit on cost moves in step: a first-pass read, not a full feasibility.
Development margin is development profit divided by GRV. This free Popurise calculator adds up land, acquisition, construction, fees, contingency, other costs, finance and selling to a total development cost, subtracts it from GRV for the profit, then shows margin, profit on cost, cost to revenue and, if you enter equity, return on equity.
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How it works
Development margin is development profit divided by GRV.
Margin answers a simple question: of every dollar the finished project sells for, how much is left as profit once everything is paid? It is the number developers quote first, and the one financiers look for when they size a deal.
The calculation is straightforward. Add up every cost the project carries, from the land through to selling costs, subtract that total from gross realisation, and divide the profit by GRV. This calculator does that live, and shows profit on cost beside it because the two are usually read together.
It is a single-scenario screen. It does not know when the money comes and goes, which is where cash flow and IRR come in, but it is the fastest way to see whether the deal is in the right shape.
Worked example
An illustrative Australian project
Example only. Not financial advice.
- Land price
- $6.5M
- Acquisition costs
- $0.55M
- Construction cost
- $34.0M
- Professional fees
- $2.6M
- Contingency
- $1.7M
- Other project costs
- $0.4M
- Finance and holding costs
- $2.1M
- Selling costs
- $1.16M
- Gross realisation value (GRV)
- $58.0M
- Equity invested
- $19.5M
What moves the number
The levers that move it
Margin is thin relative to the numbers around it, so it moves fast. A few percent on revenue or cost can shift it by several points.
- 01
Gross realisation
The denominator and the source of profit. Pricing and yield changes flow almost straight through to margin.
- 02
Construction cost
The largest cost line. A small move in the build rate is a large move in dollars, and margin feels all of it.
- 03
Land price
Paid up front and fixed. Overpay for the site and the margin never recovers, whatever else goes right.
- 04
Finance and holding
The cost of debt over the program. Higher rates or a longer build quietly erode the margin.
- 05
Selling costs
Commission and marketing on the way out. They reduce net revenue and therefore the margin.
- 06
Contingency
Money set aside for the unexpected. Prudent to hold, but it is a real cost that lowers the headline margin.
How to use it
A screen, not the full model
Use this to sort deals quickly. Margin is a screen, not a decision, and it says nothing about timing.
To compare deals fast
When you want a like-for-like read on several sites, margin is a clean, quick way to see which ones are in the right shape.
Margin next to profit on cost
Margin divides by revenue, profit on cost by cost. They answer different questions, so screen a site on both before you commit.
For the full picture
When the margin looks right, add timing, debt and cash flow to see whether it holds up over the program and clears IC.
See the softwareThe calculator suite
Four questions, four fast answers
Each calculator answers one question on a site. Together they screen a deal from land price to timed return, before you build the full model.
Questions
Answered
What development margin means, how it differs from profit on cost, and where the full model takes over.
- What is development margin?
- Development margin is development profit as a percentage of revenue. It measures how much of the gross realisation value is left as profit once every project cost is paid. It is one of the headline numbers a developer reads to decide whether a site is worth pursuing.
- How is development margin calculated?
- Development margin is development profit divided by GRV. Development profit is gross realisation value minus total development cost, where total development cost includes land, acquisition, construction, fees, contingency, other costs, finance and selling costs.
- Is development margin the same as profit on cost?
- No. Development margin divides profit by revenue (GRV). Profit on cost divides the same profit by the total cost base. Margin tends to be the lower number. Many developers read the two together, because they answer slightly different questions about the same deal.
- What is a good development margin?
- There is no universal figure. Required returns depend on location, risk, asset class, planning status, funding and market conditions. Use your own hurdle rate. This tool is a first-pass check, so treat the number as a screen rather than a benchmark.
- Does margin include finance costs?
- It should. Finance and holding costs are part of total development cost, so they reduce development profit and therefore the margin. This calculator has a dedicated finance and holding cost input so the number reflects the cost of debt over the program.
- Is this financial advice?
- No. This is a simplified modelling tool for testing development assumptions. Outputs depend entirely on the inputs you provide and are not financial, investment, planning, tax or valuation advice. Use your own professional advice before making development decisions.
See whether the margin holds over the program.
Screen the deal here, then add timing, debt and cash flow in Popurise. Free right now, no card required.