What margin should a development scheme target in India?

There is no single correct figure, and any appraisal that quotes one without reference to risk should be treated carefully. The required return depends on approval risk, funding structure, programme length and how much of the revenue is pre-sold. What matters more than the number is that you set it before you appraise, rather than discovering the margin the deal happens to produce.

Is margin on cost or margin on GDV the right measure?

Use both, and state which you mean. Margin on cost answers 'what am I earning on what I put in'; margin on GDV answers 'how much of the sales price is profit', which is the more useful measure of how much room the scheme has before it turns. They are not interchangeable, and mixing them across two appraisals will mislead you.

Why does peak funding matter more than total profit?

Because a scheme is stopped by the month it runs out of money, not by its final margin. Peak funding is the deepest point of the cumulative cash flow, and it determines the facility you need, the interest you pay and whether the scheme is financeable at all.

How should approval risk be handled in an appraisal?

As programme, not as a footnote. Extend the approval phase to the duration you actually expect, let finance accrue over it, and observe what happens to the residual. If a six-month slip removes the return, the deal is a bet on the authority rather than on the market.

What makes a feasibility defensible to an investment committee?

Every output traceable to a stated input, a cost build-up rather than a blended rate, revenue backed by transactions, a sensitivity grid on the two drivers that move the answer, and a frozen version so the numbers presented can be reopened unchanged months later.

Developer feasibility and project viability

Viability is the test a developer applies before committing: does this scheme, on these planning inputs, at this cost and this programme, produce a return that justifies the risk — and does it still do so when the two most volatile assumptions move against you? This page sets out the measures that answer that, how each is calculated, and where they mislead.

The measures that decide a scheme

Core viability measures
Measure	Calculation	What it actually tells you
Gross development value	Saleable area × rate + other revenue	The size of the prize, before anything is spent
Net realisation	GDV − marketing and selling costs	What the scheme actually collects
Total cost	Land + construction + fees + statutory + finance	What the scheme consumes
Profit	Net realisation − total cost	The absolute return
Margin on cost	Profit ÷ total cost	Return on what you put in
Margin on GDV	Profit ÷ GDV	How far revenue can fall before the scheme turns
Residual land value	The land price the scheme can support	Whether the asking price is payable
Peak funding	Deepest point of cumulative cash flow	The facility you must actually raise

The calculation chain

Viability is a chain, and every link is an assumption someone made. The value of a deterministic model is that the chain stays visible: change a link and you can see exactly which outputs moved and by how much.

planning envelope   -> permissible built-up area
product mix         -> saleable area, unit yield, parking demand
cost build-up       -> construction + fees + statutory + external + contingency
revenue             -> GDV from mix and rate, phased by absorption
programme           -> approvals, construction and sales over time
cash flow           -> peak funding and finance cost
structure           -> outright, area share or revenue share on the same base
decision            -> pursue, rework, hold or reject against stated criteria

Why the cash flow, not the summary, decides

Two schemes with identical profit can have completely different funding profiles. Approval duration, construction sequence and absorption determine when money leaves and when it returns. A scheme with an eighteen-month approval phase carries finance on land for eighteen months while producing nothing — an entirely avoidable surprise if the programme is modelled honestly at appraisal.

Sensitivity is the output, not an appendix

Present a range with named drivers. The two that move Indian residential appraisals most are the achievable sales rate and total development cost; for JV structures, the share percentage joins them. A 5×5 grid across ±10% on two drivers shows immediately whether the decision is robust or a knife edge. Try it in the residual land value calculator.

Where viability appraisals go wrong

Profit set after the fact. Decide the return you require before you appraise, or the appraisal will decide it for you.
Finance as a percentage afterthought. Interest is a function of the programme and the drawdown profile, not a flat uplift.
Contingency doing double duty. If contingency is your risk buffer and your profit cushion, you have neither.
Structures compared on different bases. An outright price and a JV share are only comparable once both are expressed as an implied land cost.
Unversioned spreadsheets. If the model that produced the committee paper has since been edited, the paper cannot be audited.

What DevPartner adds over a spreadsheet

The arithmetic is not the hard part; discipline is. DevPartner runs the chain deterministically, records the exact inputs and engine version behind every run, marks a run stale the moment a material assumption changes, and freezes an immutable report version you can reopen months later and find unchanged. See the methodology for how runs, versions and traces work.

What to work out next

Construction cost calculator
Build a defensible cost base before testing viability.
Residual land value calculator
Test what the land can support, with a 5×5 sensitivity grid.
Joint development calculator
Compare purchase and share structures on one cost and revenue base.
Sample decision report
See what a completed, frozen DevPartner decision looks like.

Frequently asked questions

What margin should a development scheme target in India?: There is no single correct figure, and any appraisal that quotes one without reference to risk should be treated carefully. The required return depends on approval risk, funding structure, programme length and how much of the revenue is pre-sold. What matters more than the number is that you set it before you appraise, rather than discovering the margin the deal happens to produce.
Is margin on cost or margin on GDV the right measure?: Use both, and state which you mean. Margin on cost answers 'what am I earning on what I put in'; margin on GDV answers 'how much of the sales price is profit', which is the more useful measure of how much room the scheme has before it turns. They are not interchangeable, and mixing them across two appraisals will mislead you.
Why does peak funding matter more than total profit?: Because a scheme is stopped by the month it runs out of money, not by its final margin. Peak funding is the deepest point of the cumulative cash flow, and it determines the facility you need, the interest you pay and whether the scheme is financeable at all.
How should approval risk be handled in an appraisal?: As programme, not as a footnote. Extend the approval phase to the duration you actually expect, let finance accrue over it, and observe what happens to the residual. If a six-month slip removes the return, the deal is a bet on the authority rather than on the market.
What makes a feasibility defensible to an investment committee?: Every output traceable to a stated input, a cost build-up rather than a blended rate, revenue backed by transactions, a sensitivity grid on the two drivers that move the answer, and a frozen version so the numbers presented can be reopened unchanged months later.

Take this from a calculator to a decision

A single-page calculator cannot phase a programme, model cash flow, compare structures on one base or freeze a report. DevPartner's deterministic engine does — with every assumption traced back to the value you entered.

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