Why Land Lease Projects Fail Long Before Launch And How To Avoid It

Originally posted on Land Lease Communities Summit on 23 April 2026

Land lease does not fail because the asset class is weak. It fails when developers mistake a good spreadsheet for a good community.

Land lease may be one of the most attractive investments in Australia’s living sector right now, but compelling macroeconomics do not guarantee successful communities, says Susan Duffy, founder and director of Channel Group, and Tiffany Richardson, marketing manager at Channel Group. In their view, the sector’s biggest risk is not demand or capital, but execution. Built on assumptions that look convincing in a feasibility model, many projects begin to weaken once real buyers, teams and operating pressures enter the frame.

The blind spots

The sector is increasingly drawing in people who understand capital, feasibility and acquisition but not always the deeper complexity of what they are building. Land lease is not a straightforward land sale where lots are carved up, sold and developers move on. It involves creating a long-term community that must be priced correctly, positioned clearly and operated sustainably over time.

Concerned that too many projects are still being acquired on the strength of surface-level metrics alone, Duffy explains that population growth, median pricing and broad supply data can make a site look compelling, but without testing assumptions against real buyer behaviour, local perceptions and operational reality, apparent viability becomes fragile.

Even when good research is conducted early, it often fails to carry through the life of the project. Insight gathered at acquisition stage can become diluted or disconnected by the time marketing, sales and operations take over. By then, the commercial case may still look sound in a spreadsheet, even though the product has become harder to sell. The risk, then, is no longer whether capital shows up, but whether capability does.

Don’t trust paper viability

Numbers don’t equate to buyer needs, and price is only part of the story. Market data alone cannot capture perception: it cannot reveal whether local buyers see a site as desirable or well connected, whether it sits on the wrong side of a catchment, or whether healthcare is close enough. 

Duffy spends much of her time trying to close this gap by helping developers turn projects that work in theory into ones that work in practice. Stressing the importance of qualitative research alongside quantitative analysis, Duffy and Richardson believe the gap between the two can be the difference between a project that looks strong in a report and one that succeeds in the market. “Not everyone goes on the ground and talks to the 70-year-olds that walk past where the development’s going to be every day,” says Richardson.

The price trap

Many developers become overly focused on the price point and neglect to interrogate the market, resulting in a misunderstanding of the relationship between price and velocity. If a premium competitor appears to be achieving strong numbers, the temptation is to assume pricing can be replicated. On paper, that makes feasibility look strong. In practice, it undermines the entire project.

A higher average sale price can narrow the buyer pool and slow the sales rate. A project selling four homes a month rather than two can appear to differ only in pace, but in commercial terms, they are entirely different propositions: a five-year project and a ten-year project are not variations on the same idea – they are different commercial realities.

A slower sell-down extends the life of the project which increases costs, staff pressure and leaves businesses exposed to external market fluctuations. The risk increases when developers rely on metro market buyers to justify premium pricing in regional areas, but when the metro market cools – as many did after the post-Covid surge – the pricing logic begins to unravel. Projects that once looked well-positioned suddenly require a reset.

Failures usually happen pre-launch

Land lease is not simply a development business – it’s an operating business: “you’re not just selling a block and moving on… This is something you’re going to hold as an asset for a period of time,” explains Duffy. 

Seeds of failure are planted early as land lease often appears to resemble a more lucrative version of residential development. In reality, it asks far more of the operator as the relationship between developer and buyer continues past settlement. Whilst the design of the home matters, so do the facilities, team structure and the way buyers are onboarded.

From acquisition through to first deposit, land lease requires development, marketing, sales, operations and community planning to work in sync. Sometimes high level coordination never forms, with businesses assuming the development manager will lead the process. “In other cases,” explains Richardson, “marketing or sales is brought in too late and expected to make the project work.”

In newer businesses – especially those entering from other property sectors – responsibility is blurred. “Problems are rarely a single bad decision,” says Duffy. “More often, it is a lack of clear ownership over the route to market.” When nobody is clearly orchestrating the path from site acquisition to market launch, critical decisions begin to drift, causing confusion that affects more than the internal process – it shapes the product itself. 

The regional opportunity and the operational risk

Regional locations make the model appear more affordable as cheaper land results in a more competitively priced product – but that does not make a project simpler. For metro-based operators, regional growth introduces a new layer of difficulty: staffing, oversight and culture that’s difficult to manage from a distance. 

Sales teams are more difficult to recruit and support, village managers are harder to find, and internal capability can become stretched across dispersed locations, explains Richardson. What begins as a pricing advantage can quickly turn into an operating headache.

A recurring blind spot, new entrants often understand the acquisition logic of regional expansion, but under-model the burden of running those communities well. A project may be easier to make stack financially in a regional market, but that does not mean it will be easier to execute.

The under appreciated pressure point

In many projects, community success relies heavily on one person: the village manager – who is expected to be equal parts operator, diplomat and culture-setter. 

Long after the marketing campaign ends and the development team moves on, the village manager becomes the day-to-day face of the community. They shape how residents experience their home, how disputes are handled, how harmonious the environment feels and, ultimately, how well the community performs over time.

A heavy load for one role to carry, village managers need to be operationally competent, highly interpersonal and capable of keeping the entire community functioning. They support residents, maintain standards, absorb tension and, in some cases, help preserve sales momentum and resales. If the wrong person fills the role, communities can destabilise faster than many developers expect.

Businesses need systems robust enough to outlast any one personality. If the long-term health of a project depends too heavily on a single exceptional hire, the model is too fragile. In Duffy’s view, better training, stronger frameworks and clearer operational support matter just as much as recruiting the right person in the first place.

The sector’s next risk: losing its value edge

The absence of exit fees, combined with home ownership and lifestyle appeal, gives land lease a clear edge over a dated retirement-village sector. 

However, land lease prices have risen, and retirement villages have improved their proposition by leaning harder into care, wellness and longer-term support – leaving land lease with a difficult question: if the product continues to move upmarket, what exactly is the value proposition that still sets it apart? 

The next differentiator may not be more facilities, but better lived experience: stronger community management, more thoughtful wellness offerings and a clearer sense of how residents are supported as they age. The next challenge for the sector is not launch – but relevance.

Land lease remains one of the most compelling stories in Australia’s living sector. However, the next winners will not be the groups that acquire the most land or raise the most capital – it will be the ones that understand the product well enough to price it realistically, launch it coherently, operate it sustainably and keep delivering value long after the first homes are sold.