Buying Vs Building in Perth?

Glad I found this forum for advice, I'm really in need of some right now.

I have a property where I live in the Bayswater area (9 kms from the city, 3 story, 5 bed/3 baths) with a backyard that has a 1,000 sqm approximately, the block has a big slope (about a 12 meter drop from the front road to the end of the block) and after bringing a geo engineer we found it's full of Peat Soil and has water running underneath.

We've talked to some builders and they've calculated to do the earth works, remove peat, retention walls ect.. will cost $150k approx to leave the terrain A1 standards and start building 3 houses.We only have $340k in the bank right now which would only assist us in the earth works and building of 1 house, we also have a property in Costa Del Sol, Spain on the market that is awaiting to be sold though with the current situation there I doubt that will happen any time soon...but our hopes were to sell that in order to finish the other 2 houses.

Doing our calculations our property right now must be worth $900k, if we do the earth works and sell everything we might get around $1.2m maybe, and if we do the earth works and sell off the back block only and keep the house we might get $560k for it.We're worried it might be over capitalizing, because we're investing a $560k block of land plus $600k in construction to gain around $400k resell value per house back there that won't pass the $1.2m mark in total.

Getting builders to simply come here and give us quotes has been a nightmare so far as its a difficult job, so I can only imagine the complications the construction itself will bring (it's the first time we build), Should we do the earthworks and sell everything off? but where could we invest that money? should we use the bank money to buy something now and get rent? we even had the thought of taking advantage of the poor market in Spain...sell everything off here to invest there but that sounds terribly risky, Would any of you experienced with building or properties be able to shed some light or give advice on what would be the best approach to this whole situation?

Thanking you for your help,
Sell the lot without spending any money yourself ... then invest in some growth areas where the $150k site costs (and I believe that is conservative) dont just get buried under the ground but actually buy you a 400m2 block of land outright ... then build a Turnkey home for $190k ... Melb is growing well with that type of investment