Common Pitfalls : Property Development in Melbourne

At delcon design and construct we seek to educate and lead our clients to achieve the very best outcome possible, both financially and personally. We have been working actively in the Melbourne property development space for over a decade. As such, our reputation often precedes us. Clients often come to us after having a less than ideal experience with another builder. Their challenges can serve as learning for others. 

 Three common areas we see clients not being successfully guided through by other builders, are: 

  • Designing a project they cannot afford
  • Not considering holding costs
  • Not being aware of or taking into account site work variation costs

Designing a project they cannot afford

Time and time again we’ll have clients come to us from other builders/designers after being initially advised a figure 40% lower than the final costing. In these cases, clients have been provided with an indication of total development cost, gone ahead with the design phase and obtaining planning permits, and then when presented with a building contract, are surprised with a figure way outside of the original budget allowance.

This leaves the client in a challenging position. With tens of thousands of dollars already spent, plus holding costs, now all potentially down the drain. Especially, if they’re unable to secure funding for the new proposed amount. 

Although there is scope for minor changes in costing throughout any project, an experienced Melbourne property development builder should be able to assess the total development cost of your multi-unit development within +/- 10%. 

To avoid finding yourself in this situation, engage a reputable, local builder who has experience building the type of development you’d like to invest in. 

Not considering holding costs

Experienced Melbourne property development investors will be well aware to factor in holding costs to a feasibility assessment, and budget. However, newer developers may not have considered the significant difference this can make to their return potential. 

At delcon, we ensure all our clients and potential clients are well aware of the realistic timeframe and budget that a Melbourne property development project entails. 

Multi-unit developments differ significantly from regular single house builds, and must be treated that way from the planning stages to pull off a successful, profitable project. 

Not being aware of or taking into account site work variation costs

Site costs are one cost that cannot be determined prior to construction. An estimate can be assessed, but your builder cannot know what soil conditions, rock etc will be found under the ground before site works commence. 

However, a proficient and local multi-unit development builder will have a vast amount of prior projects to refer back to and use as reference points for the likely costs, and potential increases. 

Communication here is also key. Ensure to communicate with your Melbourne multi-unit builder about potential scenarios in relation to site costs, and factor this information into your feasibility assessment and ultimate investment goals. 

Avoiding the pitfalls of multi-unit property development

All multi-unit development projects are an investment, and therefore involve elements of risk. The more high-value the project, often the more risk involved. However, many risks can be reduced by choosing your design and construct team wisely. 

Ensure you choose a builder who:

  • works in the local area
  • has experience with projects that are similar to yours
  • has an impeccable track record
  • is willing to communicate with you honestly, even if it’s not what you want to hear

If you’re looking for a multi-unit development builder in Melbourne, don’t hesitate to contact delcon design and construct on 1800 335 266, or info@delcon.net.au