Suburb Overview
Camberwell (VIC 3124) is a premium, tightly held suburb where strong owner-occupier demand is shifting. While median house prices have softened slightly to $2.55M, the townhouse and unit market has surged by 10.3%, driven by downsizers seeking low-maintenance living and general housing affordability constraints.
Site Constraints: This 612 sqm corner block is zoned as a Neighbourhood Residential Zone (NRZ). This imposes a strict mandatory maximum building height of 9 metres (2 storeys). Development must be restricted to low-rise (Class 1a) structures.
Feasibility Options
Given the strict 2-storey limit, we ran a Land Cost Reversing Test on the two most viable development strategies. Because total gross revenue is capped at $4.4M for both options, the maximum viable amount you can spend on the land is roughly $1.73 million.
Option A: 3-Lot Townhouse Strategy
Concept: Maximise yield with 1x 4-bedroom and 2x 3-bedroom units.
Gross Revenue: $4,400,000
Construction Costs: $1,660,000
Target Margin (10%) & Associated Costs: $1,003,200 (Includes selling, development, and GST)
Maximum Viable Land Offer: $1,736,800
Option B: 2-Lot Luxury Duplex Strategy
Concept: Target affluent downsizers with 2x premium, custom 4-bedroom residences.
Gross Revenue: $4,400,000
Construction Costs: $1,850,000 (Higher cost due to premium architectural finishes)
Target Margin (8%) & Associated Costs: $814,000 (Includes selling, development, and GST)
Maximum Viable Land Offer: $1,736,000
Conclusion
The vendor’s current asking price of $2,450,000 to $2,650,000 is entirely disconnected from 2026 development realities. The price appears to be falsely anchored to an expired permit and incorrect assumptions about new density zoning, while ignoring rising construction costs and high interest rates.
Recommendation: Do not acquire this site at the current asking price. Unless the vendor is willing to heavily discount the land by at least $700,000 to bring it down to the ~$1.73M range, proceeding with this project guarantees a negative Internal Rate of Return (IRR) and will severely erode your equity.