What are the key performance indicators to track in land acquisition and development?

1 Market Potential

Before you acquire any land, you need to assess the market potential of the location, the demand and supply of the property type, and the competition and pricing of similar projects. Market potential is a KPI that indicates the attractiveness and feasibility of your land acquisition and development opportunity. You can measure market potential by conducting market research, analyzing demographic and economic data, and using tools such as feasibility studies, gap analysis, and SWOT analysis.

2 Land Cost

Land cost is a KPI that measures the amount of money you spend to purchase the land and prepare it for development. Land cost includes the purchase price, closing costs, taxes, fees, commissions, due diligence expenses, site improvements, and environmental remediation. Land cost is a major factor in determining your return on investment (ROI) and profitability. You can measure land cost by tracking your actual expenditures and comparing them with your budget and pro forma projections.

3 Land Value

Land value is a KPI that measures the worth of your land based on its current condition, location, zoning, entitlements, and market potential. Land value reflects the potential revenue you can generate from developing and selling or leasing the property. Land value is influenced by various factors, such as market demand, supply, competition, pricing, regulations, and trends. You can measure land value by using methods such as comparable sales, residual method, income capitalization, and discounted cash flow.

4 Development Timeline

Development timeline is a KPI that measures the duration and progress of your land development process, from acquisition to construction. Development timeline affects your cash flow, financing, risk exposure, and customer satisfaction. A longer development timeline can increase your costs, reduce your ROI, and create uncertainties and delays. You can measure development timeline by setting milestones, deadlines, and contingencies for each phase of your development process and tracking your actual performance against your plan.

5 Development Quality

Development quality is a KPI that measures the standard and compliance of your land development process and outcome. Development quality involves meeting or exceeding the expectations and requirements of your stakeholders, such as customers, investors, lenders, regulators, and partners. Development quality can affect your reputation, profitability, and sustainability. You can measure development quality by using indicators such as customer satisfaction, defect rates, change orders, warranty claims, and certifications.

6 Development Profitability

Development profitability is a KPI that measures the financial performance and success of your land development project. Development profitability indicates how much money you make or lose from developing and selling or leasing the property. Development profitability depends on your revenue, costs, and risks. You can measure development profitability by using metrics such as ROI, net present value, internal rate of return, gross margin, and breakeven point.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?