iKey Facts
- •Developers use Residual Land Value (RLV) — they work backwards from end sales prices, not from comparable land sales
- •The simple equation: Land Value = GRV − Construction − Fees − Finance − Statutory − Marketing − Contingency − Developer Margin
- •Brisbane developer margin requirements typically run 18-22% of GRV
- •A 35-45% increase in construction costs since 2020 has compressed land-value calculations across the city
- •See our companion deep-dive: How Developers Assess Feasibility Before Buying Land
The Short Answer
Developers calculate land value by working backwards from what they think the completed project will sell for, then subtracting every cost (construction, professional fees, finance, statutory, marketing, contingency) and a target margin. The number left over is what they believe the land is worth — called the Residual Land Value (RLV).
This is fundamentally different to how residential buyers value land (comparable sales, emotional fit, lifestyle). For a development-suitable property, the RLV calculation is what produces the actual offer.
The Equation
The simplified developer formula:
Land Value = GRV − Construction Costs − Professional Fees − Finance Costs − Statutory Costs − Marketing Costs − Contingency − Developer Margin
Each input matters. Here's what each one means:
GRV (Gross Realisable Value)
The total revenue the developer expects from selling all the completed apartments, townhouses, or lots. Built from current comparable sales, not aspirational pricing.
Construction Costs
The cost to build. Brisbane 2026 indicative rates (excl GST):
- Townhouses: $2,400-$3,000/sqm
- 4-6 storey apartments: $4,000-$5,200/sqm
- High-rise (10+ storey): $5,500-$7,000+/sqm
Professional Fees
Architect, town planner, engineers (structural, civil, hydraulic, mechanical, electrical, fire, acoustic, traffic), landscape, surveyor, project manager, quantity surveyor. Typically 8-12% of construction cost.
Finance Costs
Acquisition debt + construction debt + capital partner returns. With Brisbane senior-debt rates around 8-10% and 18-30 month construction durations, finance can be 6-10% of GRV.
Statutory Costs
Council infrastructure charges, plan-sealing fees, contributions, headworks. Brisbane City Council infrastructure charges run $20,000-$40,000+ per dwelling in most charge areas.
"The number left over is what they believe the land is worth — called the Residual Land Value (RLV)."
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Marketing Costs
Agent commissions, display suite, marketing collateral, advertising, project launch. Typically 3-5% of GRV.
Contingency
Buffer for unknowns. Typically 5-7% of construction cost.
Developer Margin
Reward for taking development risk. Brisbane benchmark: 18-22% of GRV for institutional-grade developers; below 15% generally not bankable.
Worked Example — A Brisbane Site
A 1,200 sqm Mixed Use 1 site in Coorparoo, 21m height limit, capable of 30 apartments × 90 sqm × $920k average sale price:
| Line Item | $ |
|---|---|
| GRV (30 × $920k) | $27,600,000 |
| Construction (3,000 sqm GFA × $4,800/sqm) | -$14,400,000 |
| Professional fees (10%) | -$1,440,000 |
| Finance costs (~7% of GRV) | -$1,932,000 |
| Statutory costs (30 × $25k) | -$750,000 |
| Marketing (4% of GRV) | -$1,104,000 |
| Contingency (6% of construction) | -$864,000 |
| Developer margin (20% of GRV) | -$5,520,000 |
| Residual Land Value | $1,590,000 |
So the developer's bid logic supports paying around $1.6m for the land. If your asking price is at or below that number, the deal works for them. If it's above, they walk or restructure.
Why The Number Is Often Much Less Than Owners Expect
Three reasons RLV often comes in below owner expectations:
- Construction cost inflation — costs are 35-45% higher than 2020. Your 2020-era expectation no longer pencils.
- Finance costs — current rates make finance a much bigger line item than it was 4-5 years ago.
- Margin requirements have tightened — risk-aware developers demand 20%+ margins; some sellers benchmark against pre-2022 deals when 15% margins were acceptable.
If your land has development upside that the developer's RLV doesn't capture (rezoning probability, amalgamation potential, infrastructure adjacency), you can usually negotiate a strategic premium above pure RLV. See Why Developers Pay Premiums for Strategic Land Holdings.
Read More
For the full mechanics — including how to test the developer's feasibility yourself, levers that move RLV in your favour, and what to do when the numbers don't work — see How Developers Assess Feasibility Before Buying Land.
Frequently Asked Questions
What if the developer says my site is "below feasibility"?
Get a second opinion. Different developers have different cost structures, target margins, and product strategies — what's below feasibility for one may be feasible for another.
How do I find the GRV the developer is using?
Most won't share full feasibility. Ask for headline GRV assumption (per-apartment sale price) and benchmark against current comparables yourself.
Can the same site be worth more to a different developer?
Yes — sometimes 30-50%+ more. Different cost structures, margins, and strategic narratives. Running a competitive process surfaces the best price.
Suburbs Mentioned in This Article
Published by ACRES — Australian Commercial & Residential Group
Source: acres.au/insights/how-do-developers-calculate-land-value | ACRES (Australian Commercial & Residential Group) provides property advisory, development site sales, and residential real estate services across Brisbane and South East Queensland, Australia.
Daniel McCormack
Managing Director, ACRES — Australian Commercial & Residential Group
