Chirayuthchai TraisaengsatheanStrategic Finance for Property Development

Stage 01 / 05 · Land Acquisition & Feasibility

Stage 1 Land & Feasibility

What to decide before buying land, finance and legal work, key figures, and the go / no-go gates

Key questionsShould we buy this land, what is the most we can pay, and can it actually be built?

Checklists and strategic questions5-Stage Overview

Duration
1–6 months6–24 months including EIA and permits
Decision gate
Land Go/No-Go
EIA approval
Building permit (Or.1)

Executive Summary

Executive summary

  • The stage that uses the least cash but determines the most return. The land price and what can actually be built can hardly be changed later.
  • Feasibility must produce a ceiling price for the land, not merely confirm the price the owner is asking.
  • Land work takes 1–6 months, depending on the status of the land and permits. Including design, EIA and permits, it takes 6–24 months.

Key Metrics

Metrics to watch

  • Project IRR Hurdle≥ 18%Example
  • Equity IRR≥ 25%Example
  • Profit on Cost20–40%
  • Land / total cost20–35%
  • Peak Funding60–75%of total cost
  • Contingency5–10%

Figures are drawn from the website content; use figures from your own model and the funding terms of the actual project.

01 · Key DecisionsDecisions to make

  • Buy this plot or not, and what is the most we can pay? Use Residual Land Value: GDV less costs and target profit.
  • Highest & Best Use What type of product suits the land, and how much FAR/OSR, height and setbacks allow to be built.
  • Whether to use an SPV The shareholder structure, registered capital, and separating risk from the parent company.
  • Initial capital structure The debt-to-equity ratio, and the money shareholders actually commit before external funding is in place.
  • How to tie up the land An option or reservation agreement, to hold the right during land due diligence before paying in full.
  • Brand or operator For a branded product, this must be decided at this stage, because it affects the selling price, specifications and fees.
Residual Land Value: setting the land price ceiling from GDVConceptual; proportions are not real figures
Residual Land Value: setting the land price ceiling from GDVGDV is split into development cost, finance cost and target profit; what remains is the ceiling for the land price. If the asking price is above the ceiling, renegotiate or walk away.GDV: total sales value of the projectDevelopment cost (Hard + Soft + Contingency)Finance costTarget profitLand price ceilingResidual Land Value = GDV − development cost − finance cost − target profitOwner's asking price ≤ ceiling→ Keep negotiating and run due diligenceOwner's asking price > ceiling→ Renegotiate, change the product or walk away

02 · Finance · Tax · LegalFinance, tax and legal tasks

Finance

  • Prepare an initial feasibility study with a base case and sensitivity, with the output being the ceiling price for the land.
  • Once the BOQ is available, convert it into a full CAPEX budget (hard, soft, finance, contingency 5–10%).
  • Build a monthly cash flow model to find Peak Funding before talking to funding sources.
  • Call capital for the land and soft costs, treating this stage as 100% equity. Conventional banks generally do not lend at this stage.

Tax and accounting

  • Land held for development and sale is inventory under TAS 2, not property, plant and equipment under TAS 16.
  • For leased land, assess the right-of-use asset and lease liability under TFRS 16.
  • Register for VAT and set the revenue recognition policy when the company is set up; do not wait until transfer day.
  • If you are considering BOI privileges, check the business category and current conditions before putting them in the model, because condominiums for sale and hotels fall under different categories.

Legal and permits

  • Check the title deed, mortgages, easements and access before committing.
  • Check zoning, setbacks and height. These restrictions directly reduce GFA and GDV.
  • A condominium requires an EIA when it has 80 or more units, or total usable area of 4,000 sq m or more. Confirm the current criteria and area-specific conditions with an EIA consultant.
  • The 49% foreign quota on total condominium unit area is still the rule in use. Check the latest law before setting the sales mix.
  • Foreigners cannot own land directly. If the structure includes foreign shareholders, have legal counsel review it before buying the land.

03 · RoadmapRoadmap tasks

P0 Land and company

#TaskCategoryResponsible partyOutcomeTime
0.1Preliminary feasibility study & Go/No-Go decisionInvestment budgetInvestor/FAFeasibility model, GDV, residual land value, IRR target1–2 months
0.2Market study and pricing strategyTechnicalSales & marketingDemand study, comparable prices, absorption assumptions3–6 weeks
0.3Land due diligence (ownership / encumbrances / access)LawLawyerCheck title deed, mortgages / easements / access3–6 weeks
0.5Check zoning & land useLawTown planner/lawyerZoning compliance, land use & FAR/OSR ⚠ Confirm that residential / condominium development is permitted2–4 weeks
0.6Check setbacks & building heightLawArchitect/lawyerRecord setbacks, height limit, density ⚠ Height / zone restrictions may reduce GFA2–4 weeks
0.7Option / land reservation agreementLawLawyerOption / reservation agreement, unconditional right1–2 weeks
0.8◆ Set up the company / project SPVLawLawyerCompany registration, memorandum / articles of association, directors' authority2–4 weeks
0.9Shareholders' agreement & capital structureLegal/financeLawyer/financeSHA, paid-up capital sufficient for the project2–3 weeks
0.10Holding structure & foreign shareholding proportionLawLawyer/taxHolding structure; foreign proportion / channel correct ⚠ Check foreign restrictions2–4 weeks
0.11Tax registration (VAT / tax ID)FinanceTax teamTax ID, VAT registration1–2 weeks
0.12Open company bank accounts & treasury systemFinanceFinance teamOperating account + project account, authorised signatories1–2 weeks
0.13Set up accounting system & accounting policiesFinanceFinance teamChart of accounts, ERP system, auditor appointment, accounting policies2–4 weeks
0.14◆ Buy & transfer ownership of the landLegal/financeLawyer/financeTransfer completed, transfer fee paid, land held in the SPVAs planned
0.15Equity for land & soft costsInvestment budgetFinance teamCall capital for Stage 0–1As planned

P1 Design

#TaskCategoryResponsible partyOutcomeTime
1.1Soil boring / geotechnical surveyTechnicalGeotechnical engineerBoring report, foundation / piling criteria3–6 weeks
1.2Master planning / concept designTechnicalArchitectBuilding form, unit mix, GFA adjustment4–8 weeks
1.7Brand / operator agreement (if branded)LawOwner/lawyerManagement or licensing agreement (if any)Done in parallel
1.8Value engineering & cost plan (BOQ)Investment budgetQSCost plan by element, BOQ, VE registerIn parallel with DD
1.9Detailed CAPEX budget (hard + soft + contingency)Investment budgetFinance/QSFull project development budget, contingency 5–10%After the cost plan
1.10Project cash flow model (monthly)Investment budgetFinance/FAMonthly cash flow, S-curve, Peak Funding, IRR ⚠ State the maximum funding requirementAfter the budget
1.11Funding strategy (equity + non-bank sources)FinanceFinance/FACapital plan: equity, bonds, JV/mezzanine and a project loan if any ⚠ Non-bank: bonds, JV, mezzanine, PresaleAfter the model

P2 EIA

#TaskCategoryResponsible partyOutcomeTime
2.1Assess whether an EIA is requiredLawEIA consultantEligibility memo (unit / area thresholds) ⚠ Condominiums above the threshold must prepare an EIA1–2 weeks
2.4Public hearingLawEIA/communityRecord of the public hearing3–6 weeks
2.6Submit to the authorityLawEIA consultantSubmission receipt1 week
2.7Expert committee review (round 1)LawAuthorityComments / required revisions30–60 days
2.8Revise & resubmitTechnicalEIA consultantReport revised in line with comments ⚠ Often takes several rounds4–8 weeks
2.9◆ EIA approvedLawAuthorityApproval letterGate

P3 Permits

#TaskCategoryResponsible partyOutcomeTime
3.1Apply for the building permit (after approval)LawArchitect/lawyerSubmit application + drawings2–4 weeks
3.2◆ Building permit (Or. 1) issuedLawAuthorityBuilding permit30–90 days
3.3Wastewater treatment / environmental permitLawMEP/lawyerSystem approvalDone in parallel
3.4Excavation / land-filling permitLawContractor/lawyerEarthworks approvalDone in parallel
3.5Apply for utility connections (electricity / water)TechnicalMEPConnection approvalDone in parallel
3.6Prepare condominium registrationLawLawyerDraft registration documents, common property planDone in parallel

Some detailed design tasks are omitted from the table because they are not financial decision points.

Approval path: EIA and building permitSequence and durations from tables P2 and P3 · ◆ = decision gate
Approval path: EIA and building permitEIA steps from screening, public consultation and submission to expert committee review and revise-and-resubmit, which often takes several rounds, through to approval; then the building permit application, which takes 30–90 days.2.1 Screen whether an EIA is required · 1–2 weeks2.11–2 weeksScreen whetheran EIA is required2.4 Public consultation · 3–6 weeks2.43–6 weeksPublicconsultation2.6 Submit report to the authority · 1 week2.61 weekSubmit reportto the authority2.7 Expert committee review (round 1) · 30–60 days2.730–60 daysExpert committeereview (round 1)2.8 Revise and resubmit · 4–8 weeks2.84–8 weeksRevise and resubmit2.9 ◆ EIA approved · Gate2.9Gate◆ EIA approved3.1 Apply for the building permit · 2–4 weeks3.12–4 weeksApply for thebuilding permit3.2 ◆ Building permit (Or.1) issued · 30–90 days3.230–90 days◆ Building permit(Or.1) issuedOften several roundsIn parallel: wastewater permit · excavation/fill permit · utility connections · condominium registration prepIf the EIA is sent back several times, update the timeline in the model straight away

04 · MetricsMetrics to watch

FigureReference level from the source documentWhat it is used for
Project IRRExample hurdle of 18% or aboveDecide on the investment before considering the debt structure
Equity IRRExample target of 25% or aboveReturn to shareholders after repaying debt
Profit on Cost20–40%Compare value between projects
Land as a share of total cost20–35%Warns when the land price eats into profit
Peak FundingRule of thumb: 60–75% of total costCheck whether the funding can actually be raised
Absorption RateFrom comparable prices within a 2–5 km radiusSets the speed of revenue in the model
Contingency5–10%Tests how much cost overrun the project can absorb

Example: sensitivity of Project IRR

Uses the 247-unit sample project from the overview page, calculated excluding financing cost. Base-case Project IRR is about 20.0% per year.

CaseProject IRRChange
Selling price down 10%14.0%-6.0 points
Construction cost up 10%17.0%-3.1 points
Land price up 10%18.3%-1.8 points
Transfers delayed by 6 months18.5%-1.5 points
Transfers delayed by 12 months17.2%-2.8 points
Project IRR under changed assumptions vs the 18% hurdleSorted by impact · figures from the table above
Project IRR under changed assumptions vs the 18% hurdleA 10% fall in selling price cuts Project IRR to 14.0%, a 10% rise in construction cost to 17.0% and a 12-month transfer delay to 17.2%, all below the 18% hurdle. A 10% higher land price (18.3%) and a 6-month delay (18.5%) still clear it.12%13%14%15%16%17%18%19%20%21%Selling price down 10%: 14.0% (-6.0 points) · Below hurdleSelling price down 10%14.0%-6.0 pointsConstruction cost up 10%: 17.0% (-3.1 points) · Below hurdleConstruction cost up 10%17.0%-3.1 pointsTransfers delayed 12 months: 17.2% (-2.8 points) · Below hurdleTransfers delayed 12 months17.2%-2.8 pointsLand price up 10%: 18.3% (-1.8 points) · Still clears hurdleLand price up 10%18.3%-1.8 pointsTransfers delayed 6 months: 18.5% (-1.5 points) · Still clears hurdleTransfers delayed 6 months18.5%-1.5 pointsBase case 20.0%Hurdle 18%
  • Below hurdle
  • Still clears hurdle

The delay cases do not yet include the additional soft costs and interest, so the real impact is worse. Equity IRR will swing more than Project IRR when there is debt. All figures are examples; run them from the project's own model.

05 · Decision GateDecision gate

This stage has two gates. The first comes before paying for the land; the second comes before committing large sums to sales and construction.

The two gates of Stage 1The first before paying for the land; the second before committing large sums
The two gates of Stage 1Sequence: feasibility and land DD, then Gate 1 (land Go/No-Go) before paying for the land; then design, EIA and permits, then Gate 2 (EIA approval and Or.1 building permit) before launching sales and starting site work.Feasibilityand land DDSecure land by option◆ Gate 1Land Go/No-GoBefore paying for landDesign · EIApermitsRe-plan if delayed◆ Gate 2EIA + Or.1Before large commitmentsLaunch sales,start site workOn to Stage 2No-Go: renegotiate the price,change the product or withdrawSent back: update the model timelineand check funders can still accept it

Go: buy the land

  • Feasibility clears the agreed hurdles in both the base case and the stress case
  • The land price does not exceed the ceiling from Residual Land Value
  • The land DD report has no open issues, and zoning permits building as designed
  • A funding confirmation letter from the project sponsors is in hand
  • The brand agreement has a term sheet, if the product is branded

No-Go or renegotiate

  • The project passes only when selling prices above comparable market prices are used
  • Ownership or access is disputed
  • Height or setback restrictions make GFA lower than assumed
  • Peak Funding exceeds what equity and debt facilities can support
  • The landowner will not allow due diligence before a commitment is made

Second gate: the EIA is approved and the building permit (Form Or.1) has been issued before any site work begins. The roadmap sets the Presale launch after EIA approval. If the EIA is sent back several times, adjust the timeline in the model immediately, then check whether the funding sources can still cope.

06 · Common PitfallsCommon pitfalls

  • Using the feasibility study to confirm a land price that has already been agreed, instead of finding the price ceiling
  • Paying for the land before checking zoning, height limits and setbacks
  • Allowing for only one round of the EIA, when several rounds of revisions are common
  • Setting the timeline in the model shorter than the actual permit status, so interest and soft costs are underestimated
  • Looking only at IRR and ignoring Peak Funding
  • Not separating project cost accounts from the start, which makes it hard to accumulate costs into inventory retrospectively
  • Setting up the company with paid-up capital that does not match the funds the project needs

Sources

  1. Development Breakdown & Roadmap: Condominium-for-Sale (generic template)
  2. Real Estate Project Strategic Financial Management Handbook: A Practical Guide
  3. Strategic Finance Handbook, Chapter 1
  4. EIA criteria for condominiums
  5. Thailand property rules for foreigners in 2026

This article provides general information for educational purposes and is not advice on investment, legal, accounting or tax matters for any specific case. Check the current laws and standards before applying it.

Gate Readiness

Checklists and strategic questions before the gate

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Pre-gate checklist Gate Readiness

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Key questions Strategic Questions

  1. If the selling price falls by 10%, does the project still clear the hurdle? (In the sample project, Project IRR falls from 20.0% to 14.0%.)
  2. Are we paying for the land up to the ceiling set by the Residual Land Value, or just accepting the price the owner asks for?
  3. In which month does Peak Funding occur, how much is it, and are shareholders ready to put in 100% of the equity while the bank has not yet lent?
  4. If the EIA is sent back and delayed by 6–12 months, how much do holding costs, soft costs and interest increase?
  5. Is the foreign sales mix within the 49% quota, and does the shareholding structure avoid the restrictions on foreign ownership of land?
  6. If it fails, will we renegotiate the price, change the product or withdraw, and what would withdrawal cost?