Self-redevelopment: an honest assessment

The genuine case for it

The argument for self-redevelopment is strong and straightforward. In a developer-led redevelopment, the developer takes a margin for the capital and risk they bring. In self-redevelopment, the society borrows that capital, takes that risk, and keeps the margin.

On a site with good development potential in a strong catchment, that margin is substantial — frequently larger than the additional carpet area any developer would have offered. Members who successfully self-redevelop often end up materially better off than they would have been.

Institutional funding for society self-redevelopment has also become more available, which has removed what used to be the binding constraint.

What is actually being taken on

The risks a developer carries do not disappear in self-redevelopment; they transfer to the members.

Construction risk: if the contractor underperforms, the society manages it. Cost-overrun risk: if steel and cement prices move, or if the contractor claims variations, the society funds it — and unlike a developer, the society cannot offset by raising prices on saleable units already sold. Approval risk: if sanctions take eighteen months longer than planned, the society carries the finance cost and the members carry the additional rent. Management risk: someone has to actually run this, weekly, for years.

There is also a risk specific to societies: governance continuity. A redevelopment runs longer than most committee terms. If the members driving it step down, move, fall ill or lose the confidence of the general body mid-project, the project can lose its direction at a point where it cannot be paused.

• Construction quality and contractor performance
• Cost overruns, with no ability to reprice sold inventory
• Approval delays and the finance cost they generate
• Loan servicing obligations falling on the society
• Sales risk on the saleable component, if there is one
• Statutory and RERA obligations as a promoter
• Governance continuity across several years

The five conditions

In our assessment, self-redevelopment requires five things simultaneously. A society missing any one of them is substantially more likely to end up worse off than it would have been under a competent developer.

First, near-unanimous member cohesion. Not a bare majority — near-unanimous. Self-redevelopment involves years of decisions, capital calls and difficulties, and a faction actively opposed can paralyse it at any point.

Second, sufficient development potential that the project generates a genuine surplus rather than being marginal. A marginal self-redevelopment leaves no buffer for the overruns that will occur.

Third, access to institutional funding on acceptable terms, with the society able to service it.

Fourth, competent professional appointments — project management consultant, architect, contractor, solicitor, chartered accountant — selected on capability rather than on the lowest quote or a member's connection.

Fifth, governance that will survive the duration: a structure, documented decision-making, and enough committed members that the project does not depend on one or two individuals.

Who should not attempt it

We advise against self-redevelopment where there is an active dissenting faction, where the development potential makes the project marginal, where no member has relevant professional or project management experience, or where the society's recent history includes unresolved internal disputes.

We also advise against it where the honest answer to 'who will manage this weekly for four years' is nobody in particular. Self-redevelopment is not a passive decision that produces a better outcome; it is an undertaking that requires sustained competent work, and societies that begin it without that commitment frequently end up appointing a developer partway through — on worse terms than they could have negotiated at the start, because time and money have already been spent.

The middle options

The choice is not binary, and the intermediate structures are under-used.

A society can self-redevelop with a development management arrangement, appointing a professional firm to manage the project for a fee while the society retains ownership and the margin. This buys execution capability without giving away the margin, though it does not remove the society's risk.

A society can also negotiate a developer-led redevelopment with stronger terms than the standard offer, using the credible threat of self-redevelopment as leverage. Committees that have done an honest self-redevelopment feasibility frequently find that the exercise improves their developer offers substantially — because the developer now knows the society knows what the site is worth.

That is a genuine and often overlooked benefit: the feasibility study is valuable even for a society that ultimately chooses not to self-redevelop.