Hi all, I have nearly 2 acres in northern melbourne that by the councils DCP can be subdivided into 3 x 2400m2 lots. I was going ot subdivide them myself but as we are keen to build our house on another lot asap, i would rather sell it off as a whole to a developer with subdivision approval so we can build sooner. The 3 lots once subdivided have been valued by an independant valuer at $1,000,000. This may be a 'how long is a piece of string' question but my question is, what % profit would a developer usually aim to achieve from a subdivision of this size? From that I will have an idea of what the land is worth as a whole to a developer, taking into account subdivision costs etc.
All depends on what the developer can build on the lots and how much they can sell it for. Many developers will want to at least show a 25-30% gross return on their total development costs. So you need to know what they'll most likely want to build, their build cost and end sale value to then get an idea of what kind of premium you can ask for on the land. There has to be enough fat in the deal for the developer with risk adjusted for in order for them to want the site. Same process if the developer is just going to subdivide and sell to another developer. Their needs to be enough fat after their land and subdivision, marketing costs etc to make it worthwhile.
makes sense cheers, I was thinking of listing it for $600,000, the subdivision costs have been quoted at $150,000 leaving $250,000 for the developer.
I mean, that's only one potential way to calculate its value - a better way might be comparable sales though. Any of those?
