A development feasibility is the calculation that tests whether a project is worth doing. It takes the expected end value and subtracts every cost of getting there: the land, the build, civil works, council charges, professional fees, finance and a contingency. What remains is the margin. It is done before the site is purchased, not after.
Most first projects do not fail on the build contract. They fail on the items nobody priced. On episode 110 of the podcast, Joel and Bianca from ECHO Property made the point directly: two developments can look almost identical on the surface and carry completely different costs once stormwater, civil works, infrastructure and council requirements are counted.
What does a development feasibility include?
Every dollar between the purchase and the exit. A feasibility that only holds the land price and the builder’s quote is a hope, not a feasibility. The full version has six parts:
- Acquisition. The land, stamp duty and legal costs.
- Approvals and professional fees. Town planner, surveyor, engineers, certifier and application fees.
- Site and civil works. Everything needed before and around the build.
- Construction. The build contract itself.
- Finance and holding costs. Interest during the project, rates, land tax and insurance.
- Exit costs and contingency. Selling or refinancing costs, and an allowance for what is not yet known.
Which development costs are most often missed?
The ones that are specific to the site. A builder’s quote can be compared across projects. What sits under and around the block cannot.
| What it covers | Why it gets missed | |
|---|---|---|
| Stormwater | Drainage, lawful point of discharge, detention | Depends on the fall of the land and the neighbours |
| Civil works | Earthworks, retaining, driveways and crossovers | Often sits outside the builder’s contract |
| Infrastructure charges | Council and utility contributions for new lots or dwellings | Set by the approval, not by the builder |
| Service connections | Water, sewer, power and communications | Varies with distance to existing services |
| Holding costs | Interest, rates, land tax and insurance during the project | Grows with every month of delay |
| Exit costs | Agent, legal and refinance costs at the end | Left out because they feel a long way off |
None of these can be read from a listing. They come from the due diligence: a town planner on what council will require, an engineer on the stormwater and services, a surveyor on the levels. The cost of that advice is small against the cost of finding out after settlement.
Are construction costs still rising?
Yes, more slowly. According to Cotality, the Cordell Construction Cost Index rose 2.5% over the 12 months to December 2025, down from 3.4% a year earlier (Cotality, January 2026). Slower growth is not the same as falling costs. A budget set twelve months before the build starts is still a budget that needs to be re-priced.
What is contingency, and how much is enough?
Contingency is an allowance inside the feasibility for costs that cannot be known at the start. It is not a profit buffer and it is not optional. Development rarely follows a straight line, and the numbers should assume as much.
Allowances of 5 to 10 per cent of construction cost are common, and higher where the site carries unknowns such as slope, fill or old services. The right figure for a given project is a judgement for your builder, your quantity surveyor and your lender. The test is simple: if the contingency were fully spent, would the project still stack up?
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How does a lender read a feasibility?
As a test of whether the project can be finished and repaid. A lender is less interested in the best case than in what happens when something moves. In broad terms they look at:
- Total development cost. Whether every line above is in the number.
- Your contribution. How much equity or cash sits in the project beside the loan.
- The end value. A valuer’s view of the finished product, which may differ from yours.
- The exit. Sale, or a refinance to a long-term loan that your income has to support.
- The contingency. Whether there is one, and whether it is funded.
Policy differs between lenders and all lending is subject to assessment. The stages of the funding itself are covered in Development finance. Land, build, exit.
How does staging protect the numbers?
Staging breaks a project into parts so that not everything is committed at once. A subdivision can be completed and titled before the build begins. One dwelling can be finished before the next is started. Each stage is a point where the plan can be checked against the numbers.
It also keeps more than one exit open: sell a lot, hold a dwelling, refinance and continue. A project that only works with a single outcome at the end is carrying more risk than its feasibility shows.
When should you walk away from a site?
When the feasibility only works with the contingency removed, the end value stretched or the timeline shortened. Walking away costs the due diligence. Proceeding on a thin margin can cost the project. The discipline is to decide the minimum margin before looking at the site, not after falling for it.
Common questions
What is a development feasibility?
A development feasibility is a calculation that tests whether a project is worth doing before the site is purchased. It subtracts every cost, including land, construction, civil works, council charges, professional fees, finance and a contingency, from the expected end value to show the margin that remains.
What are the hidden costs in a property development?
The costs most often missed are specific to the site: stormwater and drainage, civil works such as earthworks and retaining, council and utility infrastructure charges, service connections, holding costs during the project and exit costs at the end. They are identified through due diligence with a town planner, engineer and surveyor.
How much contingency should a development allow?
Allowances of 5 to 10 per cent of construction cost are common, and higher where a site has unknowns such as slope, fill or old services. The right figure is a judgement for your builder, quantity surveyor and lender. A useful test is whether the project still works if the contingency is fully spent.
Should I arrange finance before buying a development site?
The finance strategy should be considered before the site is purchased, because the funding shapes what can be built, how the project is staged and which exits stay open. All lending is subject to individual assessment and lender criteria.
The takeaway
A feasibility is only as good as the costs it includes. The build contract is the visible part. Stormwater, civil works, infrastructure charges, holding costs and the exit are where two similar sites become two very different projects.
Price them before the contract, fund a contingency and keep more than one exit open. If you want the funding side tested against a site you are considering, Book a Call. Fifteen minutes with the team will tell you whether the finance supports the plan.
This article is general information only. It does not take your individual circumstances into account and is not credit, tax, legal, planning or financial product advice. Cost allowances are illustrative and vary by site, council and project. Property development carries risk, including cost overruns, delays and changes in value. All lending is subject to individual assessment and lender criteria. Speak with your own advisers before acting.