Economic feasibility of a subdivision: the numbers before the stakes

The most common mistake of the novice subdivider is falling in love with the land before running the numbers. An economic feasibility study answers a single question: does this project make money, how much and when?

The four blocks of the analysis

1. Costs

• Land: purchase price + deed + taxes.
• Technical-legal: land survey, preliminary design, design, EIA, municipal fees and RUN.
• Infrastructure: street opening, gravel surfacing, electricity (ANDE), water (ESSAP/boards), tree planting.
• Commercial: marketing, renders, scale model, sales commissions.

2. Revenue

Sellable area (after deducting streets and public areas, typically 30–40% of the total) × market price per m². The price is validated with real comparables from the area, not with optimistic listings.

3. Cash flow

Subdivisions in Paraguay are mostly sold in installments of 5 to 10 years. The cash flow models when the money comes in against when costs go out: many projects that are profitable on paper die for lack of cash in month 8.

4. Indicators

• Margin on sales: healthy projects exceed 35–45%.
• ROI: return on the equity invested.
• Break-even point: how many lots must be sold to recover the investment.

The land multiplier

Well chosen and well subdivided, a rural hectare in an urban expansion area can multiply its value 3 to 8 times when divided up. The difference between 3× and 8× lies in the prior study: access, services, real demand and infrastructure cost. You can estimate your own numbers with our feasibility calculator, and review the legal requirements before buying. The land can also be known through data: contour lines and DTM.