Real Estate
Development Approval

Why Do You Need To Get It

Real Developers get a development approval as one of their first steps in the development process, because they like to minimize their risk in every element of their business.

Earlier I told you that real developers don't start off a development by buying land. Instead they set about determining what we refer to as the 'development capacity'of the land.

If you pay $400,000 for some land and you are informed by the selling agent that he/she thinks you can develop 8 units on it. If that is true then you land cost per unit is $50,000 each (8 x $50K = $400K).

Think of this calculation the same way you would if you were building one house. The land would cost ‘X’ – the house would cost ‘Y’ – so the house and land package would cost “X + Y.”

After you buy the land, you find out that you can only develop 4 units on the land. That means your land content cost has doubled to $100,000 per unit.

I am sure you'll agree that doubling your cost of any item in a business is a big concern and may even result in your business being financially unviable.

So real developers control their business risk by making sure of the number of units they are allowed to put on the land and they do that by securing a Development Approval from the local authority that decide such matters.

To make an application for development approval it is first necessary for you to prepare plans for what you propose to develop.

These plans have to be in a certain format that have to take into account a lot of things such as:

* Building set backs from the land boundaries.

* Gross building floor area allowed for the land area.

* Number of visitor car parks required on the land for the number of units being developed.

* Car access and egress to the site from the road.

Height restrictions for a particular residential zone ... and many other things.

So you see that there are a number of issues that determine whether you can develop 8 or 7 or 6 units and all of them impact on the amount of money you pay for the land and therefore the financial feasibility of doing the development.

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