Residual land value formula
Residual land value is the maximum price a developer can pay for land after allowing for gross realisation, construction, consultants, finance, selling costs, contingencies and profit margin.
Simple version: residual land value = end value − development costs − required profit.
Inputs that matter
| Input | Why it matters |
|---|---|
| End value | The likely sale value of the completed lots, dwellings or commercial space. |
| Build cost | Construction rate, site works, escalation and contingency. |
| Professional fees | Planning, design, engineering, surveying, legal and project management. |
| Finance and holding | Interest, rates, land tax, insurance and time risk. |
| Developer margin | The profit buffer needed to justify the risk. |
Worked example
If a three-townhouse project has a total realisation of $2.4m, total non-land costs of $1.55m and required profit of $300k, the residual land value is $550k. Paying more than that means the margin has to come from optimism, not numbers.
Use the calculator
Use GoSiteHunt's residual land value calculator to test the land price before bidding.