Building Feasibility Reports Australia: Complete Guide to Structure, Content & Lender Requirements

Building feasibility reports could be regarded as the critical bridge between preliminary site assessment and formal project approval in Australian property development. With major banks typically requiring comprehensive feasibility documentation before approving development finance, and pre-sales commitments often hinging on professional feasibility reports, understanding how to structure and present this analysis may determine whether a project secures funding or fails at the first hurdle.

This guide examines what Australian property developers might need to know about creating professional building feasibility reports that satisfy lender requirements, comply with state-specific regulations, and effectively communicate project viability to stakeholders across all Australian jurisdictions.

What Is a Building Feasibility Report?

A building feasibility report is typically understood as a formal document that presents the financial, technical, and commercial analysis of a proposed property development project. Whilst feasibility analysis refers to the process of evaluating a project’s viability, the feasibility report is the tangible output—the professional document that could determine whether banks approve finance, investors commit capital, or joint venture partners proceed with agreements.

Building Feasibility vs Property Development Feasibility

The terms “building feasibility report” and “property development feasibility study” are often used interchangeably in Australia, though subtle distinctions may exist:

Building Feasibility Reports might typically focus on:

• Construction viability and technical constraints
• Building cost estimates and construction timelines
• Compliance with Building Code of Australia (BCA) requirements
• Physical site constraints and engineering considerations

Property Development Feasibility Studies generally encompass:

• Broader market analysis and demand assessment
• Financial structuring and funding strategies
• Planning approval pathways and regulatory compliance
• End-to-end project economics including sales and marketing

In practice, most Australian lenders and institutional investors would expect a comprehensive document that addresses both construction and commercial aspects—what might be termed a “comprehensive building and property development feasibility report.”

Why Professional Reports Matter in Australian Development

The Australian property development landscape presents unique challenges that typically necessitate formal feasibility documentation:

Regulatory Complexity Each state and territory operates different planning frameworks. NSW’s Low and Midrise Housing Policy may have altered feasibility parameters for thousands of sites, whilst Victorian planning reforms generally focus on housing diversity. Queensland’s Priority Development Areas operate under distinct frameworks, and Western Australia’s R-Codes system presents unique considerations. A professional feasibility report should typically navigate these state-specific requirements.

Lender Scrutiny Following APRA’s heightened scrutiny of commercial property lending, major Australian banks now commonly require detailed feasibility documentation before approving development loans. Most lenders may specify minimum report standards, required professional endorsements, and mandatory sensitivity testing.

Pre-Sales Requirements For apartment and townhouse developments, banks typically require 50-100% pre-sales before releasing construction finance. Estate agents and buyers’ solicitors generally review feasibility reports as part of due diligence, potentially influencing purchase decisions.

Core Components of an Australian Building Feasibility Report

A comprehensive building feasibility report in Australia might typically include 8-12 distinct sections, each serving specific purposes for different stakeholders.

1. Executive Summary

The executive summary should typically provide a concise overview of all critical findings, enabling time-poor decision-makers to quickly assess project viability. This section generally appears first but is often written last, after all analysis is complete.

Essential Elements:

• Project description and location (1-2 sentences)
• Development concept summary (unit types, sizes, key features)
• Total development cost estimate
• Gross realisation value (GRV) projection
• Development profit and margin percentage
• Key risks and mitigation strategies
• Recommendation (proceed, proceed with modifications, or abandon)

Length Guidance: 1-2 pages maximum

2. Site Analysis and Context

This section typically establishes the physical, legal, and locational parameters that could constrain or enable development.

Physical Site Assessment

• Site area and dimensions
• Topography, slope, and natural features
• Access points and street frontage
• Existing structures and demolition requirements
• Vegetation and tree protection considerations
• Soil conditions (preliminary assessment)

Legal Due Diligence Summary

• Title particulars and ownership structure
• Easements, covenants, and restrictions that may apply
• Heritage listings or overlays
• Contamination status and any remediation requirements
• Encumbrances that could affect development

Location Analysis

• Proximity to transport, education, and amenities
• Local area character and demographics
• Recent infrastructure improvements or planned projects
• Flood, bushfire, or other environmental hazards

3. Planning and Regulatory Assessment

Australian property development typically requires navigation of complex, state-specific planning frameworks. This section should demonstrate understanding of applicable regulations.

Zoning and Planning Controls

• Current planning zone and permissible uses
• Height, setback, and site coverage limitations
• Floor space ratio (FSR) or plot ratio requirements
• Car parking and landscaping requirements
• Any applicable State Environmental Planning Policies (SEPPs) in NSW, Planning Scheme provisions in other states

State-Specific Requirements

New South Wales NSW developments may need to address:

• BASIX requirements (7-star thermal rating as of October 2023)
• Development Control Plans (DCPs) and Local Environmental Plans (LEPs)
• Section 7.11/7.12 contribution requirements (potentially $58,000-$85,000 per dwelling in growth areas)
• Apartment Design Guide compliance for residential flat buildings
• Waste and stormwater management plans

Victoria Victorian projects typically consider:

• Victoria Planning Provisions (VPP) and local planning schemes
• ResCode requirements for residential development
• Development Contributions Plans/Infrastructure Contribution Plans
• VCAT appeal processes and timeframes
• Design and Development Overlays that may apply

Queensland Queensland developments might require:

• Compliance with Priority Development Area schemes (if applicable)
• Material Change of Use (MCU) or Reconfiguring a Lot (ROL) applications
• Infrastructure charges (varying by local government area)
• State Planning Policy considerations
• Building over sewer or easement approvals

Western Australia WA projects generally address:

• R-Codes residential density provisions (unique to WA)
• Australian Height Datum (AHD) requirements
• Development contribution arrangements
• Local Planning Scheme provisions
• Design WA policies for government projects

South Australia, Tasmania, Northern Territory, ACT Each jurisdiction presents unique planning considerations that feasibility reports should typically address based on project location.

Approval Pathway and Timeline

• Type of application required (Development Application, Building Approval, etc.)
• Estimated approval timeframe (typically 3-6 months for straightforward projects, 12-18 months for complex developments)
• Potential objection risks and community consultation requirements
• Appeal processes and associated costs

4. Market Research and Demand Analysis

This section typically demonstrates that genuine market demand exists for the proposed development, supporting revenue projections with independent evidence.

Supply Analysis

• Competing developments currently under construction
• Pipeline of approved but unbuilt projects
• Historical completion rates and absorption data
• Current vacancy rates for similar product types

Demand Assessment

• Population and household formation trends
• Employment growth and economic indicators
• Infrastructure projects that may influence demand
• Demographic preferences and buyer profiles

Comparable Sales Evidence A professional feasibility report should generally include analysis of at least 5-10 comparable sales within the past 6-12 months, ideally presented in tabular format:

Pricing Recommendations Based on comparable evidence, the report might typically recommend:

• Target price per square metre for each dwelling type
• Premium or discount factors for specific attributes (views, orientation, higher floors)
• Staging strategy for larger projects
• Pricing escalation assumptions during construction period

5. Development Concept and Yield

This section should describe the proposed development in sufficient detail for stakeholders to understand the project vision and verify yield calculations.

Development Description

• Total number of dwellings by type (e.g., 8 two-bedroom, 4 three-bedroom)
• Unit sizes and configurations
• Common areas and amenities
• Car parking provision (residents, visitors, accessible bays)
• Storage provisions
• Waste management facilities

Yield Optimisation Rationale

• How the proposed mix responds to market demand
• Site coverage and plot ratio utilisation
• Design efficiency measures (circulation space minimisation)
• Compliance with planning controls whilst maximising value

Staging Strategy (for larger projects)

• Rationale for staging approach
• Stage 1 scope and timing
• Subsequent stage triggers and timeframes
• Infrastructure coordination between stages

6. Construction Cost Estimate

Australian banks typically require construction cost estimates to be prepared or verified by a registered Quantity Surveyor (QS). This section generally forms the foundation of financial modelling.

Construction Cost Breakdown

A detailed estimate might typically include:

Note: These ranges are indicative only and may vary significantly based on location, specification, site conditions, and market conditions. Sydney and Melbourne construction costs typically exceed regional areas by 15-25%.

Professional Fees

• Architect: typically 4-7% of construction cost
• Engineer (structural, services): typically 2-4% of construction cost
• Quantity surveyor: $5,000-$25,000 depending on project complexity
• Building surveyor: $8,000-$20,000 for certification
• Geotechnical consultant: $5,000-$15,000 for soil testing
• Town planner: $15,000-$50,000 for DA preparation and lodgement

Authority Fees and Contributions

• Development Application fees (vary by council and development value)
• Infrastructure contributions (Section 7.11/7.12 in NSW, DCPs/ICPs in VIC, infrastructure charges in QLD)
• Building approval and inspection fees
• Utility connection fees (water, sewer, electricity, gas)
• Dial Before You Dig and service relocation costs

7. Financial Analysis and Projections

This section typically represents the core of the feasibility report, translating all assumptions into financial outcomes that stakeholders can evaluate.

Revenue Projections

Less: GST (if applicable, or under margin scheme)

Gross Realisation Value (GRV): Total revenue excluding GST

Development Cost Summary

Profitability Analysis

• Gross Realisation Value (GRV): $8,216,000
• Total Development Cost (TDC): $6,000,000
• Development Profit: $2,216,000
• Development Margin: 37% (Profit as % of GRV)
• Return on Cost: 36.9% (Profit as % of TDC)

Key Performance Metrics

Australian feasibility reports typically present multiple profitability metrics:

• Development Margin: Profit as percentage of GRV (typically 20-30% target for medium density projects)
• Return on Cost: Profit as percentage of TDC (typically 25-35% target)
• Internal Rate of Return (IRR): Time-weighted return (typically 18-25% target)
• Equity Multiple: Return multiple on invested equity
• Return on Equity (ROE): Percentage return on equity invested

Cash Flow Analysis

A professional report should typically include monthly cash flow projections showing:

• Revenue timing (pre-sales, settlement proceeds)
• Cost timing (land acquisition, construction drawdowns, professional fees)
• Peak debt requirement (maximum funding needed)
• Interest costs based on peak debt and assumed rates

Most feasibility software can generate S-curve cash flow diagrams that visually represent the funding profile over the development timeline.

8. Funding Strategy and Finance Structure

This section typically outlines how the project might be funded, demonstrating to lenders that appropriate finance structures have been considered.

Equity and Debt Split

Australian banks generally provide development finance on the following typical terms:

• Loan-to-Value Ratio (LVR): 60-70% of GRV
• Loan-to-Cost Ratio (LTC): 70-80% of TDC
• Interest Rate: 5.5-7.5% for major banks, 8-12% for non-bank lenders
• Pre-sales Required: 50-100% for apartment projects, lower for townhouses
• Term: Typically 12-24 months from first drawdown

Example Funding Structure:

Pre-Sales Requirements

The report should typically detail:

• Minimum pre-sales required by lender (usually expressed as % of GRV or number of units)
• Timeline for achieving pre-sales (typically 3-6 months)
• Marketing and sales strategy to achieve pre-sales targets
• Sunset clause considerations (typically 24-36 months)

Finance Costs Assumptions

• Interest rate: 6.5% per annum (example)
• Establishment fee: 1% of loan amount
• Line fee: 0.5% per annum on undrawn funds
• Valuation and legal fees: $15,000-$25,000
• Interest capitalisation: typically allowed by lenders

9. Development Timeline and Program

A realistic timeline is typically essential for accurate cash flow modelling and stakeholder expectations management.

Indicative Timeline:

Australian developers should typically allow for:

• Planning delays (particularly for controversial or complex projects)
• Weather delays (especially in tropical Queensland or winter in southern states)
• Material supply chain disruptions (experienced during recent years)
• Labour availability constraints (particularly in regional areas)

10. Sensitivity Analysis

Australian lenders generally require feasibility reports to demonstrate how the project performs under adverse scenarios. This section typically tests key assumptions to identify risk factors.

Standard Sensitivity Tests:

Risk Tolerance Assessment

The report might typically identify:

• Minimum acceptable development margin (often 15-20%)
• Break-even sales price per square metre
• Maximum cost increase the project can sustain whilst remaining viable
• Impact of extended holding periods on returns

11. Risk Assessment and Mitigation

Professional feasibility reports typically include comprehensive risk analysis addressing all major project risks and proposed mitigation strategies.

Planning and Approval Risks

• Risk of refusal or requirement for significant modifications
• Third-party objections and appeal processes
• Changes to planning policies during assessment period
• Mitigation: Engage experienced planning consultants, pre-DA consultation with council, community engagement

Construction Risks

• Cost escalation beyond budget
• Builder insolvency or performance issues
• Defects and warranty claims
• Mitigation: Fixed-price contracts with reputable builders, adequate contingency provisions, retention amounts

Market Risks

• Sales prices below projections
• Extended sales periods
• Market downturn during construction
• Mitigation: Conservative pricing assumptions, staged release strategy, presales before construction commencement

Funding Risks

• Inability to secure pre-sales
• Debt serviceability issues
• Interest rate increases
• Mitigation: Pre-approved finance facilities, interest rate hedging, equity buffer

Regulatory Risks

• Changes to tax or planning regulations
• Increases in development contribution requirements
• New environmental or sustainability requirements
• Mitigation: Professional advice, adequate contingencies, flexible design approach

12. GST Implications and Tax Structuring

The GST margin scheme could significantly impact project feasibility and should typically be addressed in professional reports.

GST Margin Scheme Benefits

Under the GST margin scheme, GST is calculated on the margin between sale price and original land purchase price, rather than on the full sale price.

Example Calculation:

Eligibility Requirements:

• Land must have been purchased from a registered GST entity
• Margin scheme must be agreed with purchaser before settlement
• Specific documentation and records must be maintained
• Property must meet “going concern” or other exemption criteria

Tax Structure Considerations

Feasibility reports might typically recommend:

• Use of Special Purpose Vehicle (SPV) or unit trust structure
• Capital gains tax (CGT) implications
• Income tax treatment vs capital gains treatment
• Division 43 capital works deductions for investors

Professional Standards and Certification

Quantity Surveyor Reports

Australian banks typically require construction cost estimates to be prepared or verified by a registered Quantity Surveyor. The QS report might generally include:

• Detailed elemental cost breakdown
• Specifications and assumptions schedule
• Market cost data and benchmarking
• Escalation allowances
• Professional indemnity insurance details

Market Valuations

Most lenders require an independent market valuation (“as if complete” valuation) prepared by a registered property valuer. The valuation might typically assess:

• “As is” current value
• “As if complete” Gross Realisation Value (GRV)
• Methodology and comparable evidence
• Market conditions assessment

Professional Indemnity Insurance

Consultants preparing feasibility reports, cost estimates, or valuations typically require professional indemnity insurance with minimum coverage levels (often $1-5 million depending on project value).

State-Specific Report Requirements

New South Wales

NSW feasibility reports might typically address:

• BASIX sustainability requirements and associated costs
• Section 7.11/7.12 contribution calculations
• SEPP compliance (Affordable Housing, Apartment Design Guide, etc.)
• Heritage considerations in conservation areas
• Waste management plans and waste levies

Victoria

Victorian reports generally consider:

• VicSmart or standard planning permit pathway
• Development Contribution Plan (DCP) or Infrastructure Contribution Plan (ICP) costs
• ResCode compliance for residential development
• VCAT appeal timeframes and costs
• Design and Development Overlay requirements

Queensland

Queensland feasibility reports should typically include:

• Material Change of Use (MCU) or Reconfiguring a Lot (ROL) application type
• Infrastructure charges by local government area
• Priority Development Area considerations (if applicable)
• Flood modelling and resilience requirements
• State Development Assessment Provisions compliance

Western Australia, South Australia, Tasmania, Northern Territory, ACT

Each jurisdiction presents unique requirements that professional feasibility reports should address based on project location and development type.

Report Presentation and Formatting

Length and Structure Guidelines

Professional building feasibility reports in Australia typically range from:

• Small projects (2-10 dwellings): 20-40 pages
• Medium projects (10-50 dwellings): 40-80 pages
• Large projects (50+ dwellings): 80-150+ pages

Visual Elements

Effective feasibility reports might typically include:

• Site location maps and aerial photographs
• Architectural renders or concept drawings
• Site plans showing proposed layout
• Floor plans for typical dwellings
• Cash flow charts and graphs
• Sensitivity analysis diagrams
• Comparable sales maps and tables

Appendices

Supporting documentation typically included:

• Title search and planning certificate
• Geotechnical report (summary or full report)
• Quantity Surveyor detailed cost estimate
• Market valuation report
• Comparable sales evidence
• Planning consultant advice
• Letters of intent from purchasers (for pre-sales evidence)

What Banks and Lenders Actually Require

Australian financial institutions typically have specific requirements for feasibility reports submitted as part of loan applications.

Major Bank Requirements

Commonwealth Bank, Westpac, NAB, ANZ generally require:

• Independent QS construction cost estimate
• Independent market valuation by registered valuer
• Minimum 15-20% development margin after all costs
• Pre-sales evidence: 50-100% of apartments, 30-50% of townhouses
• Fixed-price building contract or detailed tender analysis
• Evidence of developer experience and track record
• Professional indemnity insurance from all consultants
• Sensitivity analysis demonstrating viability under adverse scenarios

Non-Bank Lenders

Private lenders and non-bank financial institutions might typically:

• Accept lower pre-sales requirements
• Provide higher LVR/LTC ratios (up to 90% of TDC)
• Require higher interest margins (8-12% vs 6-7.5%)
• Offer faster approval timeframes (2-3 weeks vs 6-12 weeks)
• Accept lower development margins (15% vs 20%+)

Investor Requirements

For joint venture partners or equity investors, feasibility reports typically need to demonstrate:

• Clear exit strategy and timeline
• Return on equity metrics (typically 20%+ IRR target)
• Risk allocation and mitigation strategies
• Developer’s aligned interest (skin in the game)
• Track record and relevant experience

Common Feasibility Report Mistakes

Over-Optimistic Revenue Assumptions

Problem: Pricing projections based on peak market conditions or premium developments without comparable evidence.

Solution: Use conservative, evidence-based pricing from genuine comparable sales within past 6-12 months. Apply appropriate discounts for any inferior attributes (location, aspect, specifications).

Underestimated Construction Costs

Problem: Using outdated rates, excluding significant items, inadequate contingencies.

Solution: Engage registered Quantity Surveyor for detailed estimate. Include 5-10% construction contingency for unknowns. Factor in cost escalation during construction period (potentially 5-8% per annum in current market).

Incomplete Cost Capture

Problem: Missing soft costs, authority fees, marketing expenses, or interest during holding periods.

Solution: Use comprehensive checklist of all cost categories. Include holding costs for land prior to construction commencement. Factor in realistic marketing budgets (typically 2-3.5% of GRV).

Unrealistic Timelines

Problem: Assuming best-case approval timeframes, underestimating construction duration, ignoring seasonal factors.

Solution: Add 20-30% buffer to anticipated timeframes. Consult with planning consultants on realistic approval durations for specific councils. Factor in weather delays and supply chain issues.

Inadequate Sensitivity Testing

Problem: Only testing base case scenario, ignoring potential adverse outcomes.

Solution: Test multiple scenarios including: 5-10% revenue reductions, 5-10% cost increases, 3-6 month timeline delays, 1-2% interest rate increases. Identify break-even points.

Ignoring State-Specific Requirements

Problem: Using generic templates without addressing jurisdiction-specific regulations, contribution schemes, or approval processes.

Solution: Engage local planning consultants familiar with specific council requirements. Research applicable State Environmental Planning Policies (in NSW) or equivalent provisions in other states.

Technology Solutions for Report Generation

Spreadsheet vs Specialist Software

Spreadsheet Approach:

• Benefits: Flexibility, customisation, no ongoing costs
• Limitations: Time-intensive, error-prone, difficult version control, limited presentation options

Feasibility Software:

• Benefits: Pre-built templates, automated calculations, professional formatting, scenario comparison
• Considerations: Subscription costs, learning curve, template customisation limitations

When Professional Software Might Be Justified

Consider dedicated feasibility software when:

• Preparing multiple reports annually
• Requiring rapid scenario testing
• Needing professional presentation for lenders/investors
• Managing complex projects with multiple funding sources
• Seeking to reduce preparation time and improve accuracy

With purpose-built feasibility software, you could potentially model different funding structures, generate professional reports automatically, and test multiple scenarios within minutes rather than hours.

Moving Forward

For First-Time Developers

If you’re preparing your first building feasibility report, consider:

• Engaging experienced consultants for critical components (QS, valuer, planner)
• Starting with a smaller, less complex project to build experience
• Allowing extra time for approvals and construction (everything typically takes longer than anticipated)
• Building conservative contingencies into both costs and revenues

For Experienced Developers

Professional developers might benefit from:

• Standardising feasibility report templates for efficiency
• Developing relationships with reliable consultants
• Building proprietary databases of cost data and comparable sales
• Investing in software tools for rapid scenario testing
• Maintaining lender relationships and understanding their specific requirements

Professional Support

Building feasibility reports typically benefit from input by qualified professionals:

• Planning Consultant: Regulatory assessment and approval strategy
• Quantity Surveyor: Construction cost estimation and verification
• Property Valuer: Independent market valuation
• Accountant: Tax structuring and GST advice
• Development Finance Broker: Lender requirements and funding options
• Lawyer: Contract review and risk assessment

Conclusion

Building feasibility reports serve as the foundation for informed development decisions and the gateway to securing project finance in Australian property development. Whilst the complexity of creating comprehensive feasibility reports may initially appear daunting, a structured approach addressing all essential components could significantly improve approval prospects and project outcomes.

The Australian development landscape across all states and territories presents unique challenges—from NSW’s BASIX requirements to Queensland’s infrastructure charges, from Western Australia’s R-Codes to Victoria’s development contribution plans. Professional feasibility reports that address these jurisdiction-specific requirements whilst presenting clear financial analysis may help developers navigate this complexity.

Whether you’re conducting your first feasibility analysis or your fiftieth, remember that thorough documentation upfront could prevent costly mistakes during construction and potentially save months in approval timeframes. The time invested in creating a comprehensive, professional feasibility report might well be the most valuable hours spent on any development project.