Development Site Acquisition
A development site has no market price in the conventional sense. Its value is a residual: end value of the completed product, less construction cost, less professional and statutory costs, less finance, less developer margin and risk allowance. What remains is what the land is worth.
Buyers who reverse this, who start from an asking price and try to make a scheme fit, lose money slowly and then all at once. Every development acquisition we advise on begins with the feasibility and ends with a price, in that order.
Planning envelope and achievable yield
We establish what can actually be built, not what is theoretically permitted. Zone and neighbourhood plan provisions, height and density, site cover, setbacks, plot ratio, car parking rates, communal open space and building separation all constrain real yield well before the maximum height is reached.
Local government precedent matters as much as the written scheme. We look at what has recently been approved nearby and on what basis, because the gap between scheme provisions and assessable outcomes is where development risk lives.
- Zone, neighbourhood plan and any priority development area provisions
- Height, density, plot ratio and site cover limits
- Overlays: flood, bushfire, heritage, transport noise, acid sulfate soils, biodiversity
- Car parking and end-of-trip requirements
- Recent approvals in the immediate area and the conditions attached
Feasibility discipline
The feasibility is built from independently sourced inputs: quantity surveyor construction rates rather than developer estimates, agent-evidenced end values rather than aspirational pricing, real finance costs, and a realistic program including approval timeframes.
We then stress it. A 10% construction cost increase, a 5% end-value reduction, and a six-month program delay applied simultaneously will tell you more about a site than any base-case IRR.
Servicing, infrastructure charges and site conditions
Infrastructure charges in South East Queensland are material and vary significantly by local government and by product type. Sewer and water capacity, electrical supply upgrades, stormwater and detention requirements, and any trunk infrastructure contribution must be quantified before the site price is set.
Geotechnical conditions, rock, fill, contamination, easements and existing improvements requiring demolition all sit in the same category: real, quantifiable costs that most vendors have not deducted from their asking price.
Deal structure protects the developer
Development site acquisition is where terms matter more than price. Extended due diligence, a DA-conditional contract, staged deposits, put and call options and delayed settlement each transfer risk and preserve capital.
A DA-conditional structure allows the buyer to obtain approval before committing, converting a speculative land purchase into a substantially de-risked one. The cost of that structure is usually a higher headline price, and it is almost always worth paying.
Highest and best use across all product types
We test each site against multiple products, townhouses, apartments, childcare, medical, service station, industrial subdivision, retirement or land subdivision, and rank them by residual land value and risk-adjusted return, not by the vendor's assumption of what the site is for.
The best outcome on a development site is frequently a different product to the one being marketed.
Questions investors ask us.
- Should I buy a site with an existing DA?
- An approval removes planning risk and time, and is priced accordingly. It also constrains the scheme. We test whether the approved scheme is the optimal one, and whether the premium being asked for the approval reflects the value it genuinely delivers.
- What return should a development target?
- Development margin is compensation for risk. Institutional practice is a margin on cost that reflects program length, pre-commitment, planning certainty and market exposure, and a project that only works at the base case does not work.
- Can you assist with sites that have holding income?
- Yes. Sites with existing improvements and holding income are frequently the best development acquisitions because the income funds the approval period.
Request an investment strategy session.
A written brief, an independent view on the asset or the mandate, and a clear position on whether the capital should be deployed at all.