Development Finance
Last reviewed 13 June 2026 by Nick Lim, finance broker (FBAA).
Development Finance is funding for a property development project, covering land, construction and associated costs, usually released in stages and repaid when the completed project is sold or refinanced. Lenders size it against the gross realisation value and total development cost, often funding up to around 65 percent of cost as senior debt within the capital stack. It works hand in hand with construction finance, presales and a clear exit strategy.
Why Development Finance Matters
Development finance is structured around the project's end value and sell-down, not just the borrower's income.
- Funds land, construction and costs in stages
- Sized against gross realisation value and total cost
- Senior layer of the capital stack, often to ~65% of cost
- Repaid on sale or refinance via an exit strategy
- Often requires presales before construction funds
Common Features of Development Finance
- Staged funding across land and build
- Interest often capitalised during the project
- Assessed on feasibility and end value
- Senior debt sits ahead of mezzanine and equity
- Exit by sale or refinance of the finished project
Official reference: business.gov.au
What is development finance?
Funding for a property development, covering land and construction in stages, repaid on sale or refinance. See construction finance for the build portion.
How do lenders size development finance?
Against the gross realisation value and total development cost, often to around 65 percent of cost as senior debt.
Do I need presales?
Often yes. Lenders may require presales covering a set share of the debt before releasing construction funds.
How is development finance repaid?
Through the exit strategy, usually selling the completed stock or refinancing to a term loan.
What sits above development finance in the stack?
Mezzanine and equity sit above the senior debt in the capital stack, carrying more risk.