How Much Does A Multi-Unit Development Project Cost?

How much does a multi-unit development project cost?

A multi-unit development project involves a subdivision of a relatively large block of land, and building townhouses, duplex, triplex or multiple units. Property developments like these have significant profit potential and are a popular investment option. With many looking to enter the property development market in and around Melbourne, by far the question we get asked the most is, “How much is my multi-unit development project going to cost?”

The answer though, is not clear cut. 

In the initial stages, it’s difficult to determine the final cost of a project due to so many variable factors. Multi-unit developments are always custom solutions, and unlike volume builders for single dwelling sites, there can be no fixed designs with a set price. There is no ‘one-size-fits-all’ when it comes to property development projects.

Each parcel of land comes with it’s own unique challenges, meaning each project requires a custom approach. In almost ten years of business at delcon, we’ve never built the same development twice. There are factors that relate to the block of land that can change build costs significantly.

Factors of your land that impact the cost of your multi-unit development to consider are:

  • Location
  • Size
  • Shape
  • Frontage
  • Slope
  • Orientation of the land
  • Neighbouring properties
  • Easements and verge items
  • Overlays

Refer to our post ‘Choosing the right block of land for your multi-unit development’ for more information about each of these factors, and the things you should consider.

Engaging with a specialist multi-unit design and construct team early on in the planning process can help to reveal any major issues with your proposed development, before you make an investment.

Costing and feasibility assessment

 

 

 

 

With a feasibility assessment, it’s best to work from the end backwards. Figure out what you’ll be able to sell each dwelling for, and work out your feasibility from there. If you’re considering a multi-unit development in Melbourne, delcon will conduct your feasibility assessment for free.

Steps to conducting a costing for your multi-unit development project

1 – Figure out how many dwellings you’ll be able to build on a block. A rough guide is to account for approximately 1 house / unit / duplex / dual occupancy dwelling per every 300 square meters, but this is highly dependant on the features on the block of land (easements, overlays etc) and council zoning, planning and guidelines.

Speak to the local council to find out more, and a local experienced builder in your area who’s familiar with council requirements.

2 – Research what each townhouse / duplex / triplex will be able to be sold for.

Speak with a reputable real estate agent for advice regarding this, and look at what comparable properties are selling for at the moment.

3 – Do a rough costing. You’ll need to include estimates for each of the following:

  • Land costs. Cost to acquire the land, plus stamp duty
  • Finance costs: Consider your deposit, loan fees, interest rates for both land and construction, and lenders mortgage insurance (LMI) if applicable
  • Construction costs. On average, a turn-key solution that includes building design, planning assistance and permits will equate to about $14,000 to $18,000 per square. This will of course depend on the site costs, and the materials, fixtures and fittings chosen.
  • Fees and taxes: Consider bank fees, subdivision costs, Open Space Contributions, legal fees, agent sales fees and tax, including capital gains and GST.

Looking at the list of costs to consider may be overwhelming, but an experienced design and construct team can help you navigate the entire process. delcon design and construct offer a free feasibility service for party developments in Melbourne, available before clients invest in a project. This process helps you determine whether a multi-unit property development is worthwhile.

A quality build team will also be able to point out the potential risks involved in a property development. You’ll want a team that is experienced and allows for a contingency plan for the potential challenges of your project. Accounting for potential rise and fall in the process will better ensure you see the generous profit you’re counting on at the end of the project.

 

Give the team at delcon a call on 1800 335 266 for a free, no obligation discussion and feasibility assessment for your next project.