Site Acquisition
Site Acquisition is the purchase of the development site — whether vacant land, an existing dwelling for demolition, or a property with approved plans. In development finance, site acquisition is usually the first drawdown from the construction facility, or it may be funded separately and then rolled into the development loan at commencement.
Why It Matters
Site cost is a major component of total project cost, and how it is funded affects the developer's equity requirement and LTC. Some lenders fund site acquisition within the main facility; others require the developer to purchase the site with cash or bridging finance first. Understanding this distinction is key to structuring the deal correctly.
How It Works
- The developer identifies a site suitable for development (with or without DA).
- The development lender may fund the site purchase as part of the total facility, or the developer purchases separately.
- If purchased separately, the site equity is recognised as the developer's contribution, reducing the cash equity needed.
- At project commencement, the site value forms the base of the lender's LVR and LTC calculation.
Common Use Cases
- First drawdown in townhouse development finance
- Purchasing a DA-approved development site
- Using bridging finance to secure a site before construction funding is finalised
- Rolling a separately purchased site into a construction facility
Related Switchboard Resources
- Townhouse Development Finance
- Staged Drawdowns
- Development Approval (DA)
- Loan to Cost Ratio (LTC)
- Commercial Bridging Finance
Can the development lender fund the site purchase?
Some lenders include site acquisition in the total facility. Others require the developer to have already purchased (or exchanged on) the site before the development loan is approved. A broker can match you with the right structure.
Does owning the site reduce my equity requirement?
Yes — if you already own the site, its value counts toward your equity contribution. This can significantly reduce the cash you need to inject, improving your LTC position.
Can I use bridging finance to buy a site?
Yes — commercial bridging finance is commonly used to secure a site quickly, then refinanced into the development facility when construction funding is approved.