Feasibility studies either protect capital or justify decisions already made. The difference lies in assumptions, sensitivity testing, and willingness to present unfavourable findings.
Components of robust feasibility
Revenue assumptions require independent comparable evidence — sales and rentals in the same municipality and product type. Agent appraisals are inputs, not conclusions. Absorption rates should reflect current market velocity, not launch-year peaks.
Cost models integrate construction, professional fees, authority charges, finance, marketing, and sales commissions. GST treatment and land tax must be correct for Victorian entities. Construction cost should reference recent tenders or QS benchmarks, not stale internal databases.
Programme maps planning, design, procurement, construction, and sales phases with explicit referral allowances. Parallel paths reduce duration but increase coordination risk — feasibility should acknowledge both.
Sensitivity and scenarios
Sensitivity analysis tests margin under delayed sales, cost escalation, reduced yield, and extended finance periods. Decision-makers should see outcomes under pessimistic cases, not only base case optimism.
Alternative typologies — apartments versus townhouses, build-to-rent versus build-to-sell — may rescue margin on constrained sites. Feasibility should compare pathways where zoning permits multiple outcomes.
Common failures
Promotional feasibility inflates yield, understates cost, and ignores planning risk to secure mandates or land options. It fails when permits issue with conditions that erode margin or when construction tenders exceed budget by twenty percent or more.
Static feasibility frozen at acquisition without refresh through design development misleads investors and financiers. Living models updated at gated milestones prevent surprise.
If feasibility only ever shows a proceed decision, it is marketing — not analysis.
Project Avoca approach
We deliver written feasibility with stated assumptions, referenced comparables, and scenario tables. Landowners and investors receive candid recommendation — proceed, restructure, or decline — with reasoning.
Contact Project Avoca for preliminary site assessment from our Southbank office.
Financier and investor use
Institutional investors require feasibility sensitivity at investment committee. Build-to-rent models include yield on cost, stabilised NOI, and capex reserve. Feasibility formatted for investor governance accelerates approval and reduces iterative questioning.
Exit strategy
Feasibility should model exit at multiple stages: post-planning land sale, post-DA sale, and completed stock. Margin at each exit reflects risk retained. Landowners choosing early exit trade margin for certainty — feasibility makes that trade-off visible.
Professional fees
Feasibility often understates consultant and authority fees. Full development feasibility includes architect, planner, engineer, surveyor, traffic, acoustic, arborist, and authority charges scaled to project complexity. Percentage-of-cost rules of thumb fail on small boutique projects with disproportionate fixed consultant cost.
Peer review of feasibility by independent QS before land exchange is prudent on major commitments — we welcome client appointment of verifying consultant and cooperate with information request.
Documentation standards
Robust feasibility includes a stated assumptions table, comparable sales references, cost line items traceable to QS or tender, programme Gantt with referral allowances, and sensitivity matrix on yield, cost, and absorption. The executive summary states proceed, restructure, or decline with clear reasoning.
Investor committees receive formatted output aligned with governance — build-to-rent models include yield on cost, stabilised NOI, and capex reserve distinct from build-to-sell margin analysis.
Project Avoca view
We decline to produce feasibility designed solely to justify predetermined acquisition. Our reputation depends on candid findings — including recommendations not to proceed when planning risk or margin sensitivity exceeds client appetite.
Practical checklist
Before investment committee or land exchange: document assumptions; include pessimistic sensitivity; compare typology alternatives; model finance and holding cost correctly for Victorian tax; state proceed or decline recommendation explicitly. Feasibility should include a clear decline scenario before capital is committed.