Presales
Last reviewed 13 June 2026 by Nick Lim, finance broker (FBAA).
Presales are sales of units or lots in a development secured under contract before or during construction, used to prove demand and help secure development finance. Lenders often require a presale cover ratio, for example presales covering 100 percent of the debt, before funding construction of an apartment project. Strong presales lower the lender's risk and can improve the terms within the capital stack.
Why Presales Matters
Presales are how a developer proves the market will buy, which is often the key that unlocks construction funding.
- Pre-construction contracts that de-risk the project
- Often required before development finance draws
- Measured as a presale cover ratio against the debt
- Stronger presales improve terms
- Reduce the lender's reliance on sell-down risk
Common Features of Presales
- Contracts exchanged off the plan
- Deposits held in trust
- Cover ratio set against the loan
- Qualifying presales must be arm's length
- A condition precedent to construction funding
Official reference: business.gov.au
What are presales?
Off-the-plan sales secured before or during construction, used to prove demand and unlock development finance.
How many presales do lenders want?
Often enough to cover 100 percent of the debt, though it varies by lender and project.
Why do presales matter?
They reduce the lender's sell-down risk, which is often the condition for releasing construction funds.
What is a presale cover ratio?
The value of qualifying presales measured against the loan, used to set how much the lender will fund.
What counts as a qualifying presale?
Usually an arm's length contract with a real deposit, not a related-party sale. Unsold stock can later be funded by a residual stock loan.