iSummary
Residual Land Value (RLV) explained — how to calculate it, common pitfalls, calibration, and how vendors and developers should use it.
Source: ACRES — Australian Commercial & Residential Group | acres.au
RLV in One Sentence
Residual Land Value is the maximum a developer can pay for the land while still hitting their target margin. Anything more, the project fails feasibility. Anything less, the developer has upside on the land.
The Mechanics
For a hypothetical Brisbane MU1 site:
| Line | $ | % of GRV |
|---|---|---|
| GRV | $25,000,000 | 100% |
| Construction | $13,500,000 | 54% |
| Professional fees | $1,350,000 | 5.4% |
| Statutory | $750,000 | 3% |
| Finance | $1,750,000 | 7% |
| Marketing | $1,000,000 | 4% |
| Contingency | $810,000 | 3.2% |
| Developer margin (20%) | $5,000,000 | 20% |
| Total non-land costs + margin | $24,160,000 | 96.6% |
| Residual Land Value | $840,000 | 3.4% |
Note: this example shows a tight feasibility. Most Brisbane sites in 2026 sit between 8-18% land value to GRV — so a $25m GRV project would more typically support $2-4.5m land value.
What Drives the Land-to-GRV Ratio
Some sites/products are more land-rich than others:
| Product Type | Typical Land/GRV % |
|---|---|
| Townhouses | 12-22% |
| Mid-rise apartments (5-7 storey) | 8-14% |
| High-rise apartments (10+ storey) | 5-10% |
| BTR (5-6% cap rate basis) | 8-15% |
Higher product densities consume relatively less of GRV in land cost — the construction and finance lines absorb more.
Two Developers, Different RLVs
A common scenario: two developers run feasibility on the same site and produce 25-40% different RLVs. Why?
- Different construction cost (one has tighter builder relationships, another assumes market rates)
- Different GRV assumption (different sales agents, different comparables)
- Different margin requirements (institutional 22% vs boutique 18%)
- Different finance terms (relationship banks vs market debt)
- Different design / yield assumption
- Different timeline (longer = more finance cost)
This is why running 5-10 developer feasibilities — via a competitive EOI process — typically surfaces 20-40% higher RLV than a single-developer negotiation.
Sensitivity: Where the Money Hides
Move construction cost +/- 10%: RLV moves 25-50%
Move GRV +/- 10%: RLV moves 60-150%
Move margin +/- 2 percentage points: RLV moves 10-20%
Move professional fees +/- 20%: RLV moves 3-5%
The takeaway: GRV and construction cost are the two levers that matter. Other lines are noise unless gross-grossly mis-set.
How To Validate an RLV
If a developer hands you an RLV:
- Check their GRV against current 12-month suburb comparables
- Check their construction cost against RLB Quarterly Cost Report
- Check their target margin against their public project track record
- Check their finance rate against current commercial-debt term sheets
If 2-3 of these are conservative, the RLV is conservative. The conservative-input gap is your tactical lever.
Frequently Asked Questions
Why is RLV not a single number?
Because every developer plugs different inputs. RLV is developer-specific, not site-specific.
Highest RLV-to-GRV ratio to expect?
~22-25% for premium townhouse product on outstanding sites. Above 25% the feasibility is implausibly land-rich.
How do I increase RLV?
Three levers: (1) competitive process, (2) yield optimisation via architect concept, (3) flexibility on settlement/structure.
Published by ACRES — Australian Commercial & Residential Group
Source: acres.au/insights/understanding-residual-land-value-analysis | 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
