I Ran a Stress Test on a 200-Unit Residential Deal — Here's What Happened

What looked like a home run on paper turned into something very different when the numbers were pushed. This is what happened — and why it matters for every developer running feasibility on a new project.

The Base Case: 18% IRR. Looks Like a Home Run.

A 200-unit residential project in Malaysia. On paper, the assumptions were aggressive but believable — strong sales velocity, fat margins, clean returns.

• 200 units — residential development
• 18% base IRR — projected return on equity
• 5% price drop — the stress scenario trigger

The Question Nobody Asks: What If the Market Softens Right at Launch?

Most feasibility models stop at the base case. The real risk hides in the assumptions that feel safe — until they're not. Two variables were stress-tested simultaneously:

• Selling price −5% — market softens just as the sales gallery opens
• Construction costs +5% — material and labor inflation hits mid-build

The Tornado Chart: Mapping the Exact Risk Vectors

A tornado chart ranks risk factors by impact — showing which assumptions move the needle most. In this case, selling price sensitivity dominated, with construction cost inflation compounding the damage: price −5% alone dragged IRR to 13%; costs +5% alone to 15% — against the 18% base case as the reference line.

This is the difference between a back-of-the-napkin model and an institutional-grade feasibility study. You don't just calculate the upside — you map the landmines.

The Shock: IRR Collapsed from 18% to 4.2%

The profit margin vanished. The developer was essentially working for free — generating just enough to cover the bank's interest.

• Base case: 18% IRR — strong returns, attractive to equity partners
• Stress case: 4.2% IRR — margin evaporated, project barely covers debt service
• The gap: 13.8 points — wiped out by two 5% assumption shifts

It Doesn't Just Break the Math — It Writes the Advisory

FeasiBuild didn't output a broken spreadsheet. The AI generated a 2-page scenario analysis & IRR sensitivity — explaining exactly the factors why the project was vulnerable and what to do about it.

• Diagnosed the vulnerability — identified price sensitivity as the primary risk driver
• Recommended a fix — build a 10% contingency into the equity stack
• Institutional-grade output — ready to share with lenders, partners, and stakeholders

Run your own stress test before the market runs it for you — first scenario free on the Explorer tier. feasibuild.app