The principles followed by valuers in the analysis of a unit development or land subdivision are relatively straightforward, however the devil is in the detail and like most property deals success comes from quality research and understanding of trends and cycles.  For assistance in your decision making process Contact Herron Todd White .

Key elements to a development are:

• Selling prices
• Rate of sale
• Selling costs
• Development costs
• Holding costs
• Land purchase costs
• Profit and risk (developer's margin)
• Land value

Herron Todd White uses complex tools in their analysis of development projects, and has extensive back up research experience in melding the two together.

In smaller projects of les than 18 months complex cashflow models are regarded by many as overkill and we have incorporated into this site a Hypothetical Development Analysis  model for smaller projects that assesses the amount that can be paid for land given specific criteria (eg: sale prices, selling period, development costs, profit requirements etc).  We have also included a model that will calculate the profit that will be generated based on specific criteria.  Go to Profit Margin Calculator .

These tools assist with understanding and should not be relied upon by those that are inexperienced. The adage "Rubbish In" - "Rubbish Out" is true.

The model can be used to:

• Assess Residual Value of land
• Assess Developer's Margin

The most common mistakes made buy new entrants to the development market are:

• Not fully appreciating all the costs involved.
• Entering the market too late in the market cycle for that property category.
• Development through a market cycle continually increasing exposure and being caught at the end of the cycle over exposed.
• Not understanding the commitment to managing the project to ensure all elements run smoothly.
• Not understanding the importance of having marketing strategies in place.