Some property development proposals involve more than a straightforward "develop and sell" for profit scenario. For example, such development plans can involve: a mixture of some development components, which are sold upon or soon after their completion; and other development components, which are held for long-term investment.

These kinds of proposals can often be evaluated most effectively in the Professional versions of Feastudy by first considering the financial feasibility of developing and selling the whole of the development and then contemplating the feasibility of holding the development, or part of it, as an investment via the program's Develop-and-Hold (D&H) Investment study facility. (In this blog article, the three Professional versions of Feastudy, i.e., Feastudy Online Professional, Feastudy for PC and Feastudy for Mac, are collectively referred to as "Feastudy Professional" or "the program".)

In relation to a D&H Investment file in the program, a D&H investment is defined as the purchase and substantial improvement of a real estate development site/property for the purpose of holding the whole or part of the developed property over a long term period (i.e., longer than twelve months) to achieve greater wealth through rental income and/or a capital gain from the held property. It is assumed, for the purposes of a D&H Investment file in Feastudy Professional, that:

  1. The intention is to develop the property as soon as practicable and to hold the whole or part of the development as an investment as soon as practicable after it is developed.
  2. The D&H Investment file is required to be linked to a relevant pre-existing Development file for the former file to import data from the latter file concerning, among other things, the development cashflow for the Develop Period, which ends when the last End Date of all the Construction Cost items occurs in the latter file, which is known as a "source Development file".
  3. Any part of the development that is NOT held for investment purposes is sold at the end of the Develop Period and is not part of the D&H Investment study. (It is assumed that the user can discern from one or more relevant source Development files as to what type of profit might be made from the development's components that are not held but are sold as soon as practicable after the end of the Develop Period.)
  4. The Hold Period of the D&H investment study commences immediately after the end of the Develop Period and finishes when all the held components of the development are sold, i.e., on the Investment Completion Date. (Costs and income data that relate to the Hold Period should be entered in the D&H investment file.)
  5. With respect to "holding the whole or part of developed property" as an investment, either the whole development or just part of it, as determined by the relevant entry in the Investment Development Cost (IDC) window of the D&H Investment file, is held after the Develop Period ends and is sold at the end of the Hold Period.
  6. In the IDC window, the Percentage of the Adjusted Development Cost to be used (or Percentage of ADC for short) should be less than 100% if less than 100% of the proposal's Adjusted Development Cost (ADC) is held as an investment after the end of the Develop Period. For example, if what is sold at the end of the Develop Period represents 30% of the ADC at the end of the Develop Period, 70% should be entered as the "Percentage of ADC", which is used for calculating the study's IDC.

We will now briefly consider three examples of D&H investment scenarios that can arise in practice:

  1. A single-staged, residential development of 12 apartments where all the developed components are held for the long-term as an investment.
  2. A single-staged development of three different commercial buildings where two of those buildings are projected to be sold immediately after their completion while the other building is retained as an investment.
  3. A three-staged, residential development of 10 townhouses where each stage finishes at different times and the 3rd stage of four townhouses is held as a long-term investment.

Although these situations vary in their detail, they raise the wider question of how best to structure a feasibility study in the program where all or part of the completed development is intended to be retained for rental income and possible later capital growth.

Set out below is our guidance on the best general approach for such cases in Feastudy Professional:

In the program, the user can undertake D&H Investment studies for residential or commercial situations where: there is ongoing rent income for a development, which is held or partly held as an investment, upon completion of the development; and all the held developed components are sold 'in one line' at the end of the investment period.

For each of the first two D&H investment scenarios mentioned above, we recommend that, in Feastudy Professional, the user creates a Development file and then links that file to a D&H Investment file.

In the case of the above 1st scenario, we advise that, in the IDC window for its linked D&H Investment file, the entry should be 100% for the Percentage of ADC field because all of the 12 developed apartments are held as an investment.

With respect to the above 2nd scenario, we recommend that, in the IDC window of its linked D&H Investment file, the entry should be 40% for the Percentage of ADC field if the two commercial buildings that are sold on completion represent 60% of the overall development's Adjusted Development Cost (ADC).

For the above 3rd scenario, which concerns 10 townhouses, we advise that a separate Development file should be created for the 3rd stage and, in the D&H Investment file that is linked to it, 100% should be entered for the Percentage of ADC in the IDC window.

We believe it is important to note that D&H Investment studies in the program have been fundamentally designed for assessing single-stage developments which have the same class of land use. The reason for this being the case is that the program assumes, for the purposes of a D&H Investment file, that no Sell-On Income occurs during the Develop Period of the cashflow. Therefore, for multi-staged developments, which have different end dates for each stage and do not involve both residential and commercial components, we recommend that the program user considers having a separate source Development file for each stage of the development that is proposed to be held as an investment, in order to enable the study of the reports and the returns that are only pertinent to that stage in a relevant D&H Investment file.

Starting a new D&H Investment file

To start a new D&H Investment file in the program, the user can click on the D&H button from the main menu bar and follow the instructions in the popup that then appears.

A D&H Investment file necessarily requires a (pre-existing) source Development file, which does not have "Subdivision" entered for its Type of Development, to be linked to it so that the program can import data from the source file into the D&H Investment file for, among other things, the calculation of the Investment Development Cost and cashflows for the Develop Period.

Once the two files have been linked, it is then a matter of entering the data that are required for the Hold Period of a D&H investment study, e.g., Investment Dates, Borrowing Interest Rate(s), Tax Rates, Investment Development Cost, Building Depreciation items, Rent Income, Capitalisation Rate / Capital Value Escalation Rate, et cetera.

The program will ignore any Sell-On Income, Selling Fees and Vendor's Conveyancing Fees data that are entered in the source Development file for the purposes of the D&H Investment study because the program assumes that these data inputs are not relevant to the development, or that part of the development, that is held as an investment.

Although it is possible to link a source Development file, which has "Mixed" entered for its Type of Development, to a D&H Investment file, such linking is definitely not recommended if that source Development file involves a development proposal that envisages a mixture of both residential and commercial components for Australian property and contains the datum, "The Developer is registered for GST", as a result of a relevant entry in the GST Settings window. The reason for this is that it is assumed that, for those cases where "the developer [of a D&H investment] is registered for GST", Australian residential property investments are treated as being input taxed with respect to Australia's GST system, whereas Australian commercial property investments are assumed to involve many GST input tax credits and many GST Debits on Income, and the facility in the program for D&H Investment feasibility studies is designed to deal with just one of these two GST treatments, not both of them, in the one D&H Investment file.

To potentially overcome the GST problem mentioned in the last paragraph for a single-stage development that is wholly or partly held, the relevant D&H investment file for the "Mixed" use scenario could have the percentage entered in the Percentage of ADC field in the IDC window edited to represent that proportion of the Adjusted Development Cost that is commercial in nature. Making this change would enable the D&H Investment file to deal with development costs that are only related to the commercial components of the development that are held because a source Development file, which has "Mixed" for its Type of Development and is linked to a D&H Investment file, causes the program to treat the latter file as a wholly commercial (non-residential) investment. Then, to financially model the feasibility of holding the residential components of the development scenario, a copy of the source Development file could be edited to be a "Residential" Type of Development. Then the (changed and saved) source Development file could be linked to a new D&H Investment file, and a pertinent edit of the Percentage of ADC field could be entered for the residential proportion of the ADC in the latter file.

Conclusion

In summary, where a proposal involves a development outcome that is to be wholly or partly retained for investment purposes, it will often be appropriate in Feastudy Professional to begin with a stand-alone Development feasibility file and then link that file to a D&H Investment file for the overall D&H investment analysis.

This approach can help separate the development-phase feasibility study from the hold-phase feasibility study, while still allowing the relevant development data to be imported into a D&H Investment study in the manner intended by our software.

Users should also take care, however, where a proposal involves both residential and commercial components in the one mixed development, especially where GST registration and Australian GST treatments are relevant issues. In such cases, the suitability of modelling just the one GST treatment for a relevant D&H Investment file should be considered carefully in light of the limits and advice mentioned above.

If you would like assistance with a particular D&H investment proposal, using Feastudy Professional, please feel free to contact us.

(The detailed discussion of Feastudy's handling of D&H investment situations ends here.)

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Mark Andrews
Managing Director
Devfeas Pty Ltd
28/04/2026