The Changing Landscape of Property Development … in the words of Andrew Opperman

Author: Monisha Craig

Over the past three to four years, the landscape of property development has been fundamentally reshaped. What used to be a relatively predictable process—site acquisition, design, funding, pre-sales, construction, delivery—now feels more like navigating a shifting puzzle where each piece moves against the other.

For developers, financiers, builders, architects, and consultants alike, the real question today isn’t, “How do we deliver this project?” but rather, “Does this project even stack up in the first place?”

Why is this so?

We have a few considerations here:

Increased Cost of Money: Development finance is no longer cheap. Higher interest rates and tighter lending conditions put pressures on feasibility models.

A Noticeable Reduction in Off-The-Plan Sales: Buyers are more cautious, driven by fears around reliability of delivery, construction defects, and an increasingly prominent “buyer beware” sentiment.

Market Trust: Well-publicised builder collapses and defect scandals have created an air of caution that directly affects pre-sales momentum.

The result is an environment where feasibility is under greater scrutiny than ever before. Deciding how best to use a site; whether it’s multi-unit residential, re-zoning from industrial to residential, renovating an existing home, or committing to an entirely new build, has become a far more complex process.

So, how have recent interest rate changes shaped the way clients approach projects and make decisions in property and construction today?

Looking back a few years helps us understand today’s climate:

2021 to early 2022 – Record Lows: Interest rates sat at emergency levels, allowing developers to borrow at historic lows. This drove acquisitions, approvals, and strong off-the-plan sales.

Mid 2022 to 2023 – Rapid Rises: RBA lifted rates aggressively. In Australia, the cash rate rose from 0.10% in April 2022 to 4.35% by late 2023. Lending became harder, holding costs increased, and pre-sale requirements tightened.

2024 to today (Q3 2025) – Higher for Longer: Rates have stayed elevated, though recent small reductions have sparked activity and lifted confidence, both for development finance and end-user borrowing.

Cash rate climbed from an emergency low of 0.10% in late 2020/early 2021 to 4.35% by late 2023, marking the fastest tightening cycle in decades.
[Source: Reuters]

Even though rates have started to come down, borrowing is still far more expensive than what we have experienced previously. Lenders are cautious and expect developers to contribute more upfront, whether that’s funding site costs until early construction milestones are met, paying consultants and council fees in advance, or showing a stronger equity position overall, ensuring projects have a solid financial base before finance is released.

This shift in financing expectations has led to more project delays and, in some cases, cancellations.

Projects are now taking much longer at every stage. From planning and approvals to the detailed design phase and the lengthy tendering process. As a result, many projects have been put on hold while developers weigh up the best use of the site and the most workable funding structure. Where that isn’t possible, sites are being on-sold or abandoned.

ABS data shows that while dwelling approvals rose 11.9% to 17,076 in June 2025, which is the highest level since August 2022, dwelling commencements were down 11.8% since mid-2023, validating a growing approvals-to-starts gap [Source: ABS].

This shift has contributed to more project delays and cancellations. Projects have spent significantly longer in the planning and approvals phase (we’re seeing this well documented in the media) then, even longer in the Design/Construction Certificate stage, with rigorous design requirements to satisfy before a Construction Certificate is issued. At the same time, designs are refined to meet construction budgets, and the builder tendering process now stretches from initial tender through addendums, refinement and finally contract execution. This has created a significant number of projects ‘parked up’ or on hold while teams determine the best use of the site and the funding arrangement that allows a profitable start. If this cannot be achieved, sites are on‑sold or scrapped altogether. Over the past 2–3 years this scenario has risen markedly, well beyond anything I have seen in my 25 years in the industry.

In response to higher borrowing costs, both funding structures and development strategies have evolved.

We’re seeing several key shifts in how projects are funded and delivered:

Greater Equity Requirements: Banks want developers to commit more upfront equity to reduce their risk.

Pre-Sales and Buyer Confidence: With buyers cautious, larger developers are modelling ‘build to rent’ or ‘build to hold’ models to offset the need for pre-sales and tap into long-term financing. Smaller developers, who in a rising market, benefit from holding product back, continue to shop around for financiers who are prepared to take lower pre-sales.

Alternative Finance Options: Non-bank lenders and private capital are stepping in, often with higher interest but more flexible terms. Bridging finance and mezzanine debt are also becoming more common.

Joint Ventures / Capital Partnering: Developers are partnering with institutional or private investors to spread risk and attract senior debt.

Staged or Phased Delivery: Breaking projects into smaller stages reduces upfront costs and allows funding to match sales progress.

Value Engineering & Cost Certainty: Lenders now scrutinise Quantity Surveyors reports more closely than ever. Detailed cost planning and contingencies are essential for finance approval.

Focus on Product-Market Fit: Finance is only flowing to projects that clearly meet buyer demands in location, design and price.

Looking ahead, the indicators I’m watching closely over the next 12–18 months will shape how projects are planned and financed.

Several factors will influence the market in the coming year and a half:

  • Borrowing Costs: Developers have had to shift from a low-interest rate paradigm to strategies that reflect funding in line with long-term averages.
  • Timing of DA Approvals: Delays now hit harder, with each month adding finance costs, council fees and lost opportunities.
  • Builder Tender Pricing: Builders are pricing risk into tenders with higher contingencies, pushing tender prices beyond CPI.
  • Construction Price Indices & Trade Rates: Rising costs for raw materials, structural trades, services trades, and labour are driving up build costs across the board.
  • Raw Materials: Concrete, steel, aluminium and glass have experienced global supply shocks, particularly in the recent past.
  • Structural Trades: Formwork, reinforcement, façade systems and roofing remain at elevated rates due to capacity constraints.
  • Market Dynamics and Supply Constraints: Land availability, planning delays, and labour shortages continue to limit the pace of new construction.
  • Flow-On Effect: When you combine higher borrowing costs, approval delays, builder tender uplifts and rising trade prices, the impact on feasibility is magnified. What once appeared to be a viable site acquisition in 2020–21 may no longer stack up once today’s finance, approval and build cost realities are factored in.

The combined effect of higher borrowing costs, slower approvals, and rising build costs means that sites that looked viable a few years ago may no longer stack up under today’s conditions.

So, what does this mean for developers and homeowners planning projects in the current climate?

From a cost planning perspective, the challenge has shifted from simply “pricing a build” to “stress-testing” the project under real market conditions. Developers and financiers now rely on QS services not just to benchmark costs, but to provide insights on viability, funding confidence, and risk.

We, at Mitchell Brandtman, update cost plans through every stage, including council estimates, DA stage, approval, design documentation, tender reviews and cost-saving recommendations. Our database and knowledge of past experiences, past projects and real-world successes (and failures) all add to advice we can offer Developers and Financiers to ensure that projects are delivered on budget, on time and as specified.

The Key Questions Every Project Team Should Ask

  1. Am I relying on outdated assumptions about sales, funding or delivery?
  2. Do I have the level of cost certainty that lenders and investors need?
  3. Have I tested my project against multiple scenarios, including, interest rate changes, cost escalation and softer demand?

Looking Back and Looking Ahead

As I reflect on my 25 years in the industry, I want to thank our many clients – Developers, Builders, Architects, Engineers, Financiers and so many others – I’ve had the privilege of working with.

From our humble beginnings, we have grown into one of Australia’s leading Quantity Surveying practices, it has been an incredible journey.

At Mitchell Brandtman, we remain committed to providing expert cost management advice and sharing our knowledge with a service offering I am proud to say, is truly market leading in the Quantity Surveying field.

When accuracy and speed define the success of a construction project, Building Information Modelling (BIM) and 5D Cost Planning should be more than just words that get thrown around. They’re essential tools for experts to develop a smarter, more integrated way of working. As Caitlin Shields, Queensland Partner at Mitchell Brandtman and expert in 5D and BIM, puts it, “The original intent of BIM was a methodology or ideology about how teams should work. It’s not just a physical thing; it’s a way of thinking.” At its core, BIM is a collaborative process underpinned by digital technologies. It allows stakeholders to develop a coordinated digital representation of a project, incorporating data across all disciplines.  

It starts with what’s available, as Caitlin explains. A 3D model (or model) is provided, and Quantity Surveyors utilise this information to introduce the 5D aspect: cost. “The model is one part. The real value is in the information, it’s about how well that information is structured and shared.” Caitlin says. It’s about using all components of a project and how that information is structured, analysed, and ultimately used to make better decisions. Quantity Surveyors use this data not to author, but to consume, organise and analyse.

In traditional workflows, Quantity Surveyors spend the majority of their time measuring from 2D documents. BIM flips that paradigm. “The models give us quantities rapidly, so we spend less time counting and more time asking the critical questions about why things cost what they do.”

The result is a deeper cost analysis that is provided within an expedited timeframe. Teams can run iterations, refine estimates multiple times (not just at traditional milestone points), and deliver insights in real-time to keep pace with evolving project needs. “The magic of 5D is when we can link the cost data directly from the model outputs so when the design changes, the cost changes with it.” Caitlin explains.  

The Utilisation of BIM

Despite its clear benefits, BIM and 5D adoption remains patchy across the industry. Why? The answer is simple. It is not mandated. “I’m an advocate for governments to make it mandatory and make people do it right.” Caitlin says. Owners and developers often don’t ask for BIM because they don’t fully understand its value. Many projects are delivered and immediately sold off meaning the long-term benefits of embedded digital information are lost on those footing the bill.

Barriers to BIM adoption in Australia: derived from Sompolgrunk et al. (2023)

Without incentive or pressure from clients, many project teams stick to old methods. Even subcontractors and trades are often disengaged from the BIM process. “You’ve still got a whole industry that’s full of tradies in utes with invoices in their glove box. They’re not thinking about digital models and most importantly that transfer of knowledge if project information.” But Caitlin argues the tide is turning. Those who are engaging with BIM, are beginning to see just how much it can transform project delivery. BIM enables everyone, from architects and engineers to trades and financiers, to be on the same page. And for projects that get it right, the outcomes speak volumes.

A ‘Sunny’ Example

Mitchell Brandtman’s involvement in the $1.8B Sunshine Coast Public University Hospital project is an example of BIM and 5D at its best. “That was a gem of a project and a game changer in our methodologies” Caitlin recalls. “We were not involved from the beginning, but when we arrived, we were able to give rapid and Repetitive feedback on quantities and model information which influenced the way software providers structured their outputs. The result was a seamless process from design to delivery by providing virtual trade packages, digital coordination, and collaboration.

The project didn’t just benefit from efficiencies the team provided, but it also helped shape industry standards. It’s proof that when Quantity Surveyors are engaged early and enabled to work in 5D, everyone wins.

Who Benefits and Who’s Using It

The answer to who benefits is everyone. But the biggest gains are for asset owners, operators, and those managing portfolios over time. Caitlin is especially passionate about where BIM is gaining traction now. Major players across public and private sectors are beginning to understand the long-term operational gains of having a ‘digital twin’. A digital twin is valuable for owners and operators, especially in sectors like healthcare, aged care, education, or government, where understanding and maintaining a building over its lifespan is essential. “They want their real building and a digital building. The digital one holds all the information, when warranties expire, when to replace things, what materials were used. That’s incredibly powerful.”

These are long-term assets, often heavily maintained and managed. With BIM, lifecycle costs can be controlled better. Even Build-to-Rent developers are beginning to see the light. While not mandated, many of them work with designers who are already producing models, meaning the QS can use those for fast and accurate cost planning. “It’s a tailored experience. Even for townhouses or multi-res, we use models where we can. There’s value being delivered even if the client doesn’t know we’re doing it.” says Caitlin.

A white paper by Autodesk (2021) reported that BIM engagement in Australia/New Zealand is slightly below the global average, with 46% of respondents using it on at least half their projects, an average usage rate of 50%, compared to the global 52%. However, a more recent publication by Deloitte and Autodesk (2025) reports that Australian construction businesses have increased their average use of digital technologies from 5.3 in 2024 to 6.9 in 2025, with BIM identified as a prominent technology, indicating broader adoption across the industry.

One of the most common misconceptions is that 5D, or the use of digital collaboration can only happen when models are 100% perfect. Caitlin reminds us that this notion of BIM is a methodology and should be a tool in the whole development process, “We don’t throw the baby out with the bathwater. We’ll use whatever information we’re given, models, 2D documents, schedules and we’ll make it work.” That adaptability is a hallmark of Mitchell Brandtman’s approach. For over two decades, the company has been at the forefront of BIM and 5D implementation. Not just using the tools, but shaping the processes, leading conversations with software vendors, and influencing digital project delivery standards in Australia.

Where others are only now beginning to promote 5D as part of their services, Mitchell Brandtman has been doing it for a long time. The company’s extensive benchmarking database, internal validation tools, and collaboration are at the core of the company and team members values. And clients see the benefits. “They just get better outcomes. Contingency considerations, better feasibility, fewer variations. Because we’ve spent more time analysing, not measuring.” With the 2032 Brisbane Olympics on the horizon, BIM and 5D are expected to play a role in the construction of such a mammoth of a task. 

Philosophy to Delivery

BIM and 5D aren’t just digital tools, they’re a philosophy and a way of delivering projects better. As Caitlin explains, “This is about using better information to make better decisions. It’s not faster and cheaper, it’s smarter and more confident. That’s how we add value. ”Whether working with operators, government agencies, financiers, or developers, Mitchell Brandtman’s approach to BIM and 5D helps projects move from concept to construction with greater clarity and collaboration.

“We’re advocates,” Caitlin says. “Not because it’s shiny and new but because we’ve seen what happens when it’s done well.” For clients, the takeaway is clear; if you want a project with intelligent cost outcomes, BIM and 5D should not be seen as optional extras. They’re the future of Quantity Surveying and Mitchell Brandtman is already there.

Sources:

  • Autodesk, 2021. BIM and digital transformation: 2021 Australia and New Zealand insight report. [online] Available at: https://damassets.autodesk.net/content/dam/autodesk/www/industry/aec/bim/aec-smart-market-insight-2021-bim-digital-transformation-australia-new-zealand-en.pdf [Accessed 25 Jul. 2025].
  • Deloitte Access Economics and Autodesk, 2025. State of digital adoption in the construction industry 2025. [online] Deloitte. Available at: https://www.deloitte.com/au/en/services/economics/analysis/state-digital-adoption-construction-industry.html [Accessed 25 Jul. 2025].
  • Sompolgrunk, A., Banihashemi, S., Hosseini, M. R., Golzad, H., & Hajirasouli, A. (2023). ‘An integrated model of BIM return on investment for Australian small- and medium-sized enterprises (SMEs)’. Engineering, Construction and Architectural Management, 30(5), 2048–2074.

In the world of property development, cost overruns and last-minute design changes are often accepted as part of the process. But what if they didn’t have to be? According to Alan Tan, our Partner in Victoria, there’s a significant yet underutilised opportunity to take control of project costs long before a single shovel hits the ground, during the design development stage.

“Construction cost is considered the most expensive item in a development project,” Alan stresses. “Often it could equate to half of the total development costs. So, it makes sense to focus on that, but we don’t often see developers invest in updating, optioneering, and managing the construction cost at various design stages.”

At Mitchell Brandtman, we’ve seen time and again that engaging a quantity surveyor throughout the design development stage can make or break the success of a project.  There were developers rushing from planning approval to tender, missing out on important stages in the design process. As Alan puts it, “They just go straight to the builder and ask, ‘How much?’. But there’s just not enough information at that point, and that’s where cost surprises come in.”

Costing the Design versus Designing to Cost: A core idea Alan puts as a powerful shift in project thinking is the difference between costing the design and designing to cost. “You’ve got two ways to approach it,” he says. “Costing the design, where you do the design first, then find out the cost. Or designing to cost, where you let the cost guide your decisions as the design evolves. The second approach gives you far more opportunities at lower cost and risk.” Alan shares that at feasibility or business case stage, QSs collaborate with design teams to explore alternatives like repurposing vs. rebuilding, residential vs. commercial, or comparing above-ground and basement parking options. “Without early costing appraisal, how do you know if these options are viable? That’s the kind of strategic input we provide from an early stage.”

Big-Ticket Items and Life Cycle Costing

Alan’s approach is refreshingly pragmatic, which includes material selection and looking at future performance, not just upfront cost.

“We prepare a cost plan that breaks down the individual components so we can identify, say top 10 big-ticket items to review in detail. That’s where the money is. Every 10% – 20% savings on those items could mean hundreds of thousands in real savings.” On the flip side, this doesn’t mean slashing features indiscriminately. “Some expensive finishes and features may only be small quantities, but they add major visual value. So, we appreciate them, especially if the total cost is not significant.”

The “Cost of Change Curve”, a concept widely discussed in project management, highlights the importance of early decision-making in project development. Implementing changes during the initial design phases is more cost-effective and less disruptive than making alterations in later stages.

Alan also advocates for life cycle costing and value engineering appraisals. “Sometimes it’s better to spend more now if it means lower maintenance, replacement and fewer disruptions later,” says Alan. “This is especially important in sectors like healthcare, banking and data, where even a day of downtime is catastrophic and costs many times more.” However, he also notes there’s a balance to strike. “…with technology or trend evolving so quickly, it’s often not worth investing heavily in items that will be obsolete in a few years.”

Why Projects Blow the Budget: When asked about the kinds of projects most vulnerable to budget blowouts, Alan indicates that it’s not about project type. “You can have a straightforward project but still blow the budget if you lack cost monitoring, control, and management throughout. Some projects involve Quantity Surveyors at the schematic stage [A]: then stop with no QS involvement during design development stages B and C. Suddenly, QSs are requested to review tender returns. The opportunity to manage cost and value by then is greatly reduced.”

The Value of Expertise Over Automation

So how does a QS offer such tailored advice? It comes down to benchmarking and detailed cost analysis. “We’ve worked on so many types of projects; we have the historical data and benchmarking analysis tools,” says Alan. “We can analyse and compare the costs, functional areas and ratios. That’s how we know where to flag potential issues and opportunities.”

Documentation also plays a major role in cost certainty. Alan adds, “If design documents are incomplete or inconsistent, then you’re going to get variations. BIM and clash detection tools help here, but you still need a human eye to interpret and advise.” In today’s buzz around AI and digital tools, Alan is cautiously optimistic but remains firm on the value of human insight. “It’s a tool, not a substitute for expertise,” he says. “We’re not just measuring and plugging numbers into software. We’re analysing, balancing and managing value for stakeholders throughout the project lifecycle from early stages.”

Final Thoughts

The key message from our interview with Alan Tan: don’t underestimate the value of the design development stage. It’s the best opportunity to add value, minimise waste, and ensure your budget works for the building. In his words, “Quantity Surveyors are not just about cutting costs like in the 1960s or 70s. Today, it’s about guiding design with insight, managing costs early, and making sure every design decision adds long-term value.”

As Australia’s construction sector continues to navigate economic uncertainty, the conversation is shifting. While inflation and interest rates dominate headlines, industry leaders are turning their attention to a deeper, more persistent issue: shortage of labour. In this landscape of inconsistent costs, understanding the real drivers behind construction budgets has never been more critical.

The Australian construction industry continues to grapple with rising costs, but it’s not just about inflation, interest rates, or even materials. According to Darryl Bird, Queensland Partner, the most pressing challenge impacting budgets today is clear: labour. While interest rates and inflation get most of the headlines within the industry, Darryl explains that these economic factors are “compounding the problem that we’ve already got”. Construction costs were already under stress due to systemic issues, mainly, labour. He notes that issues like material supply, which caused disruption and uncertainty through COVID, is now something the industry is managing more effectively and has subsequently settled into “a new norm”.

BuildSkills Australia, the national skills body for construction workforce development, reported in March 2024 that 90,000 new tradespeople would be needed by the year’s end. However, Australian Bureau of Statistics (ABS) indicated that by November 2024, the industry only managed to hire over 50% of the target. Source: BuildSkills Australia, 2024; ABS, 2024

The market, he says, is adjusting to these new norms with greater resilience than during the disruptions of COVID. Inflation and global trade tensions are creating unpredictability in material access and pricing. But not all international trends are negative. As Darryl notes, U.S. tariffs on imports may offer unexpected advantages: “With a government focussed on turning towards more internal manufacturing, the application of international tariffs by the U.S. may provide opportunities for Australia to access more materials from countries like China and India.  It may actually have the reverse effect to what has been described to us in the press,” Darryl suggests.

Across the country, cost pressures vary by state and sector. Victoria’s residential market is showing signs of increased competition and more stable pricing. While residential markets like Melbourne are seeing competition return, Darryl points out that in Queensland, “we’re seeing the most risk going forward is in the upper end of town, in the more commercial construction space.” He adds, “The demand on the local contractor and labour pool in this space is where we’re going to see most challenges.” While the media focus at the moment is on productivity and getting more from our existing workforce, we need to be aware that workforce also need to expand to meet future demands.

The current cost risk isn’t from timber or steel, it’s from people. “Labour by far,” Darryl states, when asked about the industry’s top concern. While material price hikes are often visible and publicised, he warns that these figures are often misunderstood, “When you work material supply price increases through the entirety of a construction project or contract sum… the impact on the bottom line cost is watered right down.” In contrast, labour costs impact all trades, all projects and every site, and “remains a problem right across Australia… it’s not a challenge that can be quickly and easily solved.”

Adding to the complexity, Darryl explains that “it’s not just about direct labour cost, but also availability and the cost impost of getting labour and keeping resources on site … it can be difficult and unpredictable.” Unlike materials, which can be budgeted, managed and pre-ordered, labour availability can shift overnight due to competing projects and opportunities available to our contractor and subcontractor pool in this market. Whilst this challenge is difficult to mitigate completely, we must be prepared from project inception. “We observe a lot of time, effort and cost wasted in a development project exploring design concepts that are just not feasible in this market,” Darryl says. The key is early involvement of Quantity Surveyors who can provide data-led insights, cost-led design advice, and guide clients toward feasible delivery models from day one. “As a QS our value is best realised at that early stage… leveraging the data and experience we have to provide reliable cost information and alternatives at the very start,” he explains. Mitchell Brandtman is also increasingly called on to help navigate risk throughout construction. The earlier a QS is involved, the more opportunity there is to implement risk mitigation measures and avoid costly mistakes. If that opportunity for early engagement is missed: “The snowball’s already rolling down the hill…, the problems are there already,” Darryl warns.

One way the industry is looking to address labour shortages, is through the growth of Modern Methods of Construction (MMC), including modular and prefabricated systems. Whilst this sector once battled market acceptance and cost premium hurdles these challenges have eased, “MMC is becoming a much more attractive option than it once was… it’s becoming more popular because construction and manufacturing largely occurs in a warehouse, you’re not subject to rain, inclement weather conditions.” Local manufacturers are delivering high quality products that meet Australian standards and aesthetic expectations, and the cost gap between traditional and modular is narrowing. He emphasises that MMC doesn’t just mean full prefabricated buildings: “There’s modular components – wall and structural systems, bathroom pods, stair systems – that reduce on-site labour pressures.”

The Construction Industry Training Board (CITB) highlights the quantifiable benefits of modular construction, noting it can accelerate project timelines by up to 50% and reduce on-site labour by up to 80%. Source: CITB

Despite the challenges, Darryl sees signs of optimism, “I think the sentiment in the industry has certainly changed… people are more focused on solutions and tackling the industry challenges.” For developers, that means thoughtful designs, smarter delivery methods, early QS engagement, and close collaboration with all parties, “Looking at delivery partners that can solve problems or establish risk mitigation measures nice and early… the builder is a big part of that.” Asking, “What works for you? How does that work for us?… Having proactive and collaborative conversations with builders, subcontractors and suppliers about the collective challenges will enable the team to be better equipped to navigate issues like labour availability and volatility and create more certainty amongst the delivery team.” This approach leads to more thoughtful decisions, fewer surprises, and outcomes that help balance cost, time and quality. Alternate procurement methods, where “risk can be shared and addressed in an appropriate way” rather than transferred blindlyin a challenging market, is another opportunity identified by Darryl.

The message is clear, managing construction cost inflation in Australia isn’t just about tracking economic headlines. It’s about tackling the root cause, labour shortages, and planning smarter from the ground up and from project inception.