Other Similar Questions answered in this post:
- How do real estate developers make money?
Property developers make a margin on the cost of the development called the Development Margin. It is no different than a manufacturer making a margin on the cost of producing “xyz” product.
The Total Development Costs (TDCT) include the land, government taxes like stamp duty, GST or VAT as well as development and construction costs.
When the developed units, townhouses or apartments are sold, all costs are deducted from total sales or the GRV (Gross Realisation Value) and what is left is the property development profit.
Property development profit can then be expressed in a percentage, which is the Development Margin.
Typically for small to medium size developments the property development profit can range from $30,000 to $200,000 per unit. In the example below, the per unit profit is $100,451.40 with a development margin of 18.4%
