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We frequently get asked – What’s a realistic timeframe and budget for my multi-unit property development in Melbourne? 

For new investors, the actual time and budget requirements of property development can come as a surprise. 

If you step into a project with your eyes closed, you’re likely to find yourself in deep water. Articles like this one and others from reputable sources are a good start in your research, but it’s important to speak with an experienced development builder (or design and construct team) in your area before making any investment decisions. 

A multi-unit property development often means there is an older property being knocked down, and a number of new homes being built in it’s place. It’s likely the property is then going to be changed from being on a single title, to being subdivided with each home on a separate title. 

As you can probably guess, this takes a significant amount of time.  Not only do these steps take time, there’s also a lot that goes on prior to these points.

A summary of tasks, timelines and averages*: 
(*Note: The below are only intended as a rough guide for 2019 in Melbourne, Australia. Each development, individual and situation is unique and both time and costs may fall outside of the averages or ranges provided.)

• Finding and purchasing your development site
  • Time: 1-6 months 
  • Cost: $400,000+
• Building design
  • Time: 2-6 weeks for up to 4 units
  • Cost: $10,000 to $17,000
• Development Application:
  • Time: 6-12 months
  • Cost: $2000 
• Working drawings (design and engineering)
  • Time: 4-6 weeks
  • Cost: $7000-$16,000
• Builder quote and contract
  • Time: 1-2 weeks
  • Cost: 0
• Building Permit issuance
  • Time: 2-4 weeks
  • Cost: $2000-7000
• Gaining Finance
  • Time: 4-12 weeks
  • Cost: 0
• Construction
  • Time: 22-43 weeks pending on size of project
  • Cost: $12,000 – $17,000 per building square
• Subdivision
  • Time: 10-16 weeks
  • Cost: $3000-$8000

Finding your development site

Once you’ve decided you want to be involved with property development, you’re going to need a block of land. 

Selecting a suitable site can be time consuming and onerous. It may be difficult to find the right block that is in the area you want to build in, and has the size and characteristics you’re after. 

When you find a potential site, you need to conduct a Feasibility Assessment prior to making an offer. This will ensure you don’t enter into an investment that won’t offer you a viable return. You’ll also have to act fast as the perfect block won’t be around for long. 

• Average time for selecting the suitable block: 1-6 months.
• Example cost of a suitable development site in Melbourne in 2019: $400,000+ (or less, if you already own a site)

When you’ve chosen a site and your offer has been accepted, you’ll sign a contract. Within the contract you can request permission to lodge your Development Application during the settlement period.

Building Design and Development Application

delcon design and construct are a boutique design and construct team based in Melbourne. Our focus is on multi-unit property development. We offer a construction service, as well as a design service where we manage the entire development project for our clients resulting in a turnkey project. This includes design, development paperwork and application, and construction. We aim to get as much done prior to settlement as possible, before land interest payments are payable. 

Designs form part of your Development Application, and are subject to strict requirements that differ from council to council. Having a builder and / or building designer that is experienced in property development, and experienced in your build area will mean you don’t have to waste time while your builder and designer get to know the area and requirements.

• Average design timeline: 2 – 6 weeks
• Cost: $10,000-17,000
• Average Development Application process:  6-12 months
• Cost: $2000

Working Drawings, Builders Quote and Contract, and Building Permit

After the DA application is approved, your designer and draftsperson can develop Working Drawings that will form part of the Building Permit. 

Working drawings allow your builder to properly quote the project, and you can then finalise the building contract.

With the building contract in place, your Building Surveyor can issue your building permit. 

• Average Working Drawings timeframe: 4-6 weeks
• Working drawings cost: $7000 – $16,000 pending on size of project
• Average time for builder quote and contract draw up: 1-2 weeks
• Average Building Permit timeframe: 2 – 4 weeks
• Building surveyor cost: $2000- $7000

Finance Approval

Once you have a signed contract, it’s time to finalise your finances. The bank will issue Unconditional Approval for your Construction Finance once you have a signed Building Contract.

The bank will require a lot of paperwork, and it’s easy to miss something. You’ll hold up the process if you’re not ready, and don’t respond quickly so be mindful of this. 

• Average time for finance approval :  4 weeks
• Cost: 0

Construction

Now it’s time for construction. Your builder will get your site file together, order materials, organise trades and commence and manage construction.

• Average construction time (duplex single storey): 26 weeks
• Average cost per dwelling (3 bedroom single storey) in Melbourne: $190,000

Subdivision

Once you’re gained certificate of occupancy and homes are complete, the builder will gain the final payment from the bank and you gain ‘ownership’ over the developments.  

You may now choose to rent out the properties, or subdivide and sell on one or more of the dwellings. 

If you’ve decided to rent and hold the properties, this process can begin prior to completion. 

Subdivision involves further council applications and can be conducted at the early stages of construction. 

• Time for subdivision: 16weeks
• Cost for subdivision: $3000-8000 pending on size of project

Your total timeframe and costs

Although it’s difficult to provide an accurate measure of time and budget, we can put realistic ranges on each element. We’ve provided ranges and averages that are true from our experience. However, it’s important to note that there are so many variables and aspects with each item that could alter. The final cost of development could well be outside of the ranges provided. If you’re seriously considering a Melbourne Property Development project, get in touch and with your specific site and development details, we can provide an accurate, customised Feasibility Assessment for your project.

Get in touch today by calling us on 1800 335 266 or emailing info@delcon.net.au

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