Sep 2, 2023
Understanding the Hidden Costs in Multi-Unit Developments in Melbourne
Budget blowouts? Learn the hidden costs lurking behind Melbourne's multi-unit developments and how to stay in control
When it comes to building multiple dwellings on a single block in Melbourne—whether it's a duplex, triplex, or a small townhouse cluster—developers often focus heavily on build costs per square metre. But that’s only part of the picture.
At Gidaya Group, we work with first-time and experienced developers alike who are often caught off guard by hidden or underestimated costs that have the potential to blow budgets and delay projects. If you're serious about maximising return on investment, knowing where the financial landmines are buried is critical.
What Are Hidden Costs?
Hidden costs are those that aren’t always detailed in the initial builder’s quote. These can include planning-related fees, site-specific preparation works, compliance upgrades, council contributions, and much more. They typically fall into three categories:
Planning & Legal
Site Preparation & Infrastructure
Holding & Financing Costs
Let’s break each of these down for a Melbourne-based multi-unit development.
1. Planning & Legal Costs
Town Planning & Application Fees
Melbourne councils charge development application (DA) fees based on the size and nature of your project. Add to that the cost of engaging a town planner (typically $3,000–$7,000), plus possible VCAT representation if objections arise.
Consultant Reports
Expect to need:
Arborist reports (especially near protected trees)
Traffic management studies (for multi-unit access)
Sustainable Design Assessments (SDA)
These reports often cost between $800 to $5,000 each and are essential to secure planning approval.
Legal and Title Fees
Section 173 Agreements
Easement adjustments
Restrictive covenant removals
These legal steps can range from $2,000–$10,000+ depending on the complexity.
2. Site Preparation & Infrastructure
Demolition and Asbestos Removal
Demolishing an old dwelling can cost $15,000–$30,000. If asbestos is present, that could increase costs by another $5,000–$15,000 due to specialised handling.
Soil Testing & Engineering
A standard soil test may uncover:
Reactive clay, requiring more expensive slab designs
Contamination, leading to remediation costs
Expect engineering and soil reports to cost $2,000–$10,000+.
Utility Connections and Upgrades
Multi-unit projects often require:
Separate metering
Water/sewer upgrades
Power pits or three-phase power
Budget $10,000–$25,000 depending on lot configuration and number of dwellings.
3. Holding & Finance Costs
Interest During Construction
Depending on your loan structure, interest-only payments could accumulate quickly during delays or council hold-ups.
Land Tax & Rates
These continue throughout development and can be higher if the property isn't your principal place of residence.
Marketing & Selling Fees
Planning to sell some of the dwellings? Account for:
Agent commissions
Advertising campaigns
Legal conveyancing
GST, Stamp Duty & Subdivision Costs
GST: Some developments trigger GST obligations. Speak to a tax accountant early.
Stamp Duty: If you're buying a site with dual occupancy potential, stamp duty is payable upfront.
Subdivision: Can cost $25,000–$50,000+ and involves surveying, applications, and service upgrades.
How Gidaya Group Helps You Plan for the Unseen
As builder-developers, Gidaya Group offers:
Feasibility studies pre-acquisition
End-to-end project management
Transparent quoting and early cost risk assessments
Our experience in Melbourne’s infill development space means we know where surprises typically lurk—and how to budget for them.
Final Thoughts
Hidden costs can quietly kill the profitability of your multi-unit development. But with thorough planning, the right advisors, and an experienced build partner, they can be anticipated and mitigated.
If you’re preparing to develop in Melbourne, talk to Gidaya Group for a comprehensive project brief and early-stage guidance.
