ᐅ Development costs for economic feasibility analysis of building land

Hello dear forum,

I registered here because, after days of extensive online research, I was unable to find any clear information on this topic.

A good family friend, who is already retired, hinted after inquiry that he could imagine selling his building land exclusively to me and not to a developer or the municipality, but only as a whole plot of about 6000m2 (65000 sq ft).

I am only interested in a plot of land to build a single-family house with a size of about 700m2 (7500 sq ft).

For this, I have been looking for answers to the following questions:

• What costs can I expect for planning the utility connections?
• What costs can I expect for the utility connections themselves? (Road construction of about 100 meters (330 feet) length)
• What is the maximum price per m2 I can offer the owner?
• Is it possible to subdivide the plot individually?
• Is it feasible to manage this independently at all?

• The plot is located in Lower Saxony and borders a fully developed road. "Within the development plan"
• The standard land value is 120€/m2 (approximately 11 USD/sq ft).
• The selling price for developed building land per m2 is easily 160€ (approximately 15 USD/sq ft).
• The plot is located at the edge of a settlement.
• A drawing is attached. (20 years old, provided by the municipality)
• Equity is available to finance a large part of the estimated investment myself.
• Area for the road including a roundabout, diameter 16 meters (52 feet), about 1000m2 (10760 sq ft)

I kindly ask for understanding, as I am aware that, due to lack of experience, I might face major setbacks. However, the thought of acquiring a rare piece of land and finally fulfilling my dream of owning property motivates me.

Therefore, I would like to explore with the exceptionally experienced members of this forum whether I should proceed and possibly hire a professional or if I would be better off avoiding this altogether.

Thank you very much in advance!

Before I address your question, I would like some information. Is the plot officially designated as building land with an approved development plan? In other words, is no building permit / planning permission process required?

Perhaps an additional question: why do you want to take on this hassle? You yourself say that you have substantial wealth and could mostly finance the project with your own funds. In that case, I would simply negotiate the land purchase. There is no big profit to be made from the land itself; the real earnings come from building the houses.

Thank you for the quick response. There is a development plan for the plot. The photo I attached comes from this plan.

Yes, negotiating is also an option, but I want to explore all possibilities beforehand.

Londonderry80 schrieb:

Yes, negotiating is also an option,

... otherwise, you need to calculate in the seven-figure range, and you should be aware that it is very unlikely any bank will grant you a loan, so you will have to cover all costs upfront.

Ok, I did not expect that.
My estimate for about 100 meters (330 feet) of road including water supply, sewage, electricity, and gas is a maximum of 300,000 euros.

Well, you start by purchasing the land, and how much do you pay for it? You probably don’t get it for free. Let’s say it’s 100€/m² (10.7$/ft²), so the first 600,000€ (about 640,000$) are gone already.
Then you still need surveyors, planners, insurance, sales for the plots, soil investigations, and so on.
Keep in mind that you won’t see any return on investment until the development is fully completed. By that, I mean building-ready and surveyed plots. The finished road – asphalt or paving – comes afterwards. Also, remember parking bays, street lighting, and so forth.
You will also need to plan for construction period interest over the next few years because selling the plots is not something that happens quickly or easily.
Oh, and don’t forget taxes on whatever profit remains in the end. If you sell the building plots individually, it will likely be considered a commercial activity, so business taxes may apply as well.

Just a few points to consider. I once read that (if the municipality develops) in NRW approximately 11,000–12,000€ (12,000–13,000$) per running meter of road is estimated (all in).