Category: Blog

Property development can be a highly effective way to create value in the New Zealand property market, but it also raises many questions for both new and experienced developers. From understanding equity requirements to navigating construction funding structures, the process involves a number of financial and strategic considerations.

Our property development FAQ and glossary blog, we address some of the most common questions developers ask when planning a project. By understanding development finance, the risks involved, and what lenders typically expect, developers can approach their projects with greater confidence and clarity.

How Much Equity Do I Need for Property Development?

Most property development projects require developers to contribute between 20% and 30% of the total project cost as equity, although the exact amount depends on the lender and the project risk profile.

Equity may come from cash contributions, land already owned, retained profits from previous developments or even enabling works done prior drawing down from a development funding loan facility.

Lenders use equity requirements to ensure developers have financially committed to the project – effectively ensuring they have “skin the game”. Experience from past cycles, including the Global Financial Crises, has shown that risk tolerance can differ significantly when deveopers are using external capital versus their own funds.  It also provides a buffer for the lender against increases in construction costs or a softening in sale prices.

Stronger equity positions can improve the likelihood of funding approval and provide greater flexibility when structuring development finance.

How Long Are Development Loans?

Development loans are most commonly structured for 12 months, although this can vary depending on the size and complexity of the project. Smaller standalone spec builds may be suited to shorter terms (e.g. 6 months), while larger or multi-stage developments are often structured with a 12-month term and extension options. Construction programmes, product type, and the proposed exit strategy all play a role in determining the appropriate loan term.

The loan term typically runs from the first drawdown – which may include land settlement for shovel-ready projects or refinancing an existing pre-development facility – through to construction and completion. Because development projects progress in stages, funding is normally advanced through progress drawdowns as construction milestones are reached rather than as a single lump sum. This staged structure helps align funding with the project timeline and ensures costs are released as work is completed.

Do I Need Presales to Secure Development Finance?

Presale requirements vary significantly between lenders. Main banks often require high levels of presale cover (in some cases up to 120% of the debt), whereas non-bank lenders such as ASAP Finance may fund projects without any presales.

The majority of projects we fund at ASAP Finance commence without initial presale cover, with developers typically choosing to market and sell the properties during the construction phase.

It is also important to note that presale requirements are often deal-specific. Larger or higher-risk developments may require stronger presale cover, while simpler projects with higher equity contributions may not require any presales at all.

What Happens if Construction Costs Increase?

If construction costs increase during a project, developers typically rely on contingency allowances within the feasibility model to absorb unexpected expenses.

Cost increases can occur due to material price changes, labour shortages, or unforeseen site conditions. Because development projects often run for many months, it is important that your feasibility includes realistic construction estimates and adequate contingency buffers. Understanding and planning for property development risks early helps ensure projects remain financially viable even if costs rise during construction.

If the contingency within the facility is fully utilised and insufficient funds remain to cover cost overruns, the developer may be required to contribute additional equity. This is one of the key reasons lenders assess the borrower’s financial position and overall strength when structuring the facility.

What Is a Property Development Feasibility Study?

A property development feasibility study is a financial analysis used to determine whether a development project is likely to be profitable.

A feasibility study typically assesses factors such as land acquisition costs, construction costs, professional fees, financing/holding costs, and the projected end value of the completed development. Developers use a ‘feasibility’ to understand potential returns and identify risks before committing to a project. Lenders also review feasibility models carefully when assessing development finance applications to ensure the project remains viable under different market conditions.

Can First-Time Developers Get Development Finance?

Yes, first-time developers can obtain development finance, although lenders generally assess these projects more carefully.

Without an established development track record, lenders may limit or reduce key funding metrics, or place greater emphasis on the developer’s financial position, experience of the builder and wider team of consultants. Many new developers begin with smaller projects or work alongside experienced professionals to strengthen their funding applications. ASAP Finance provided this type of assistance for a nine-unit block in Mt. Wellington project led by first-time developers.

Property Development Glossary

Development Finance

Development finance refers to specialised funding used to support property development projects. These loans typically short or fixed-term loans (often around 12 months) and cover land acquisition or refinance of pre-development loan facilities, construction costs, and project-related expenses. They are structured around the project timeline.

Equity

Equity is the developer’s financial contribution to the project. It may come from cash, land value, retained profits or funds injected into the development such consenting costs and construction. It represents the developer’s share of the project’s total cost.

Feasibility Study

A project “feasibility” evaluates the financial viability of a development project by comparing total development costs with the projected value of the completed project.

Gross Realisation Value (GRV)

GRV refers to a project’s Gross Realisation Value – the estimated total revenue of the development, being the combined value of all properties once completed and sold or refinanced. Lenders commonly use GRV as a key metric when assessing project viability.

Loan-to-Cost (LTC)

Loan-to-cost (LTC) measures the percentage of total project costs that a lender is willing to fund. Total project costs typically include land acquisition, consenting, construction, professional and consultant fees, finance and holding costs, and contingency. It is a key metric used to determine the level of equity required from the developer.

Presales

Presales occur when properties within a development are sold off-plan i.e. before construction is completed. Lenders may require presales to demonstrate market demand, validate price points, and strengthen the project’s exit strategy.

Progress Drawdowns

Progress drawdowns refer to the staged release of development funding as construction milestones are completed. Lenders typically require quantity surveyor reports before each drawdown.

Development Finance Guidance from ASAP Finance

Property development involves many moving parts, and understanding how funding structures work is an important part of managing risk and ensuring project viability.

At ASAP Finance, we work with developers to structure development and construction loans that support projects from site acquisition through to completion. By aligning finance structures with project timelines and feasibility models, developers can approach their projects with greater certainty.

If you are planning a development or want clarity around how property development finance works, get in touch with the team at ASAP Finance to discuss your plans.

Property development offers significant opportunities to create value in the New Zealand property market, but it also involves a range of risks that must be carefully managed. From construction cost increases to market fluctuations and funding constraints, even well-planned projects can face challenges if potential risks are not identified and mitigated.

While these risks are widely understood at a high level, what matters in practice is how they affect a project’s ability to be funded, delivered, and exited successfully. Lenders assess projects through this lens, which means developers who take a structured approach to risk are better positioned to secure funding and achieve consistent outcomes.

Common Property Development Risks

Once you understand how property development finance works, the next step is to familiarise yourself with the potential risks that accompany each project. Property development projects face several categories of risk that can affect both project viability and profitability. While these variables cannot always be eliminated or controlled, experienced developers plan for them early and structure their projects to reduce potential impacts.

Construction Delays and Cost Overruns

Construction risk remains one of the most significant challenges in property development. Cost increases, labour shortages, and delays can all impact both timeline and total project cost. Even relatively modest overruns can reduce profit margins, particularly where projects are tightly structured.

Delays also extend holding costs and interest exposure, which can compound quickly over the life of a project.

To mitigate: Developers typically manage these risks by working with experienced builders, securing fixed-price contracts where possible, and creating detailed cost estimates during the feasibility stage. Including contingency allowances within the project budget also provides a financial buffer if unexpected costs arise. This includes completing critical infrastructure works such as stormwater and wastewater connections, along with driveway construction, prior to vertical build to avoid delays in the titling process. It also involves locking in utility provider agreements early (such as from Vector and Watercare) where upgrades or network capacity constraints may materially impact costs.

Changing Markets

Property markets can shift during the lifecycle of a development project. A project that appears profitable during the feasibility stage may face reduced demand or lower sale prices by the time construction is completed.

Changing economic conditions or buyer preferences can all influence resale values. Developments that take several years from acquisition to completion may be exposed to these types of market fluctuations. The key risk is not that markets move, but that feasibility assumptions fail to allow for it.

To mitigate: Developers often adopt conservative assumptions when estimating projected sale values. Conducting detailed market research, analysing comparable sales, and aligning the project design with local buyer demand can all help improve the likelihood of achieving targeted prices. Obtaining pre-sale cover can provide additional confidence to both lenders and developers by validating pricing assumptions and demonstrating market depth, although it is not always a requirement depending on the funding structure.

Interest Rates and Funding Risk

Because property development projects rely heavily on borrowed capital, financing conditions play an important role in project viability. Rising interest rates, tightening lending criteria, or funding gaps can significantly affect cash flow during the development period.

Interest costs are typically incurred throughout the construction phase, which means unexpected rate increases or delays can materially affect project margins, particularly where funding is structured on a floating basis (e.g. BKBM plus a margin). In contrast, many non-bank lenders provide fixed rates for an agreed term, which offers greater certainty during delivery. However, if the loan term needs to be extended, re-pricing may occur at expiry, which can impact overall project returns.

To mitigate: Developers manage funding risk by stress-testing feasibility models under different interest rate scenarios and maintaining sufficient equity to support the project if conditions change. Working with lenders with extensive development finance experience can also help ensure the funding structure aligns with project timelines.

Planning and Consent Risks

Planning and regulatory approvals are another common source of uncertainty in property development. Resource consent processes, zoning restrictions, infrastructure requirements, or council compliance conditions can all delay project timelines.

Unexpected consent requirements may also increase project costs or require design changes, which can affect feasibility.

To mitigate: Developers typically undertake detailed due diligence before acquiring a site. Engaging planning consultants early and allowing realistic timeframes for approvals can help identify potential issues before construction begins. The quality of consultants and development partners also plays a critical role in the overall success of the project.

How Experienced Developers Manage Development Risk in Practice

Because development projects carry multiple layers of risk, lenders take a structured approach when assessing applications. Their goal is to help projects remain financially viable even if timelines extend or costs increase.

Feasibility Assessment

Before approving funding, lenders assess the project’s financial feasibility in detail. This includes reviewing development costs, projected end values, timelines, and contingency allowances, and considering how the project performs if conditions change.

Equity Requirements and Lending Limits

Development finance is typically structured with defined limits such as loan-to-cost (LTC) and loan-to-value ratios (LVR). These parameters ensure that developers retain meaningful equity in the project and provide a buffer if costs increase or values soften.

Staged Funding During Construction

Funding is generally released in stages as construction progresses. Drawdowns are linked to milestones and verified through inspections or reporting, helping ensure that the project remains on track and that sufficient funds remain available to complete the development.

Structuring for Property Development Success with ASAP Finance

Property development always involves some level of uncertainty. Developers who understand potential risks early are better positioned to structure projects that remain viable even if conditions change. While these risks cannot always be completely removed, they can be anticipated and managed.

At ASAP Finance, we work with developers to structure development and construction loans that shield projects from risks. Our focus is on creating funding frameworks that align with the realities of development projects, giving each project the best chance of success. If you’re planning a development and want guidance on structuring finance for your project, get in touch with the team at ASAP Finance to discuss your plans.

Property development can be a powerful way to create value in the New Zealand property market, but it is fundamentally different from traditional property investment. Rather than relying on long-term market growth, development involves actively improving land or buildings, creating value through construction or subdivision, with the intention of generating profit at completion. Property development is often considered a sort-term investment strategy compared with traditional property investment which is a long-term game.

Before committing to a project, one of the most important questions to understand is: how does property development finance work? Unlike a standard residential mortgage, development finance is structured around feasibilities, risk management, staged funding, and clearly defined exit strategies.

What Is Property Development?

Property development refers to purchasing land, or an existing property, to increase its value with the intention of selling the completed project for a profit. The nature of the development – either construction or subdivision – depends on the nature of the site. Unlike property investment, which takes a more passive approach in following market growth, development involves actively finding ways to create value.

What Counts as Property Development?

In the New Zealand context, property development typically includes:

• Renovations or flips
• Constructing new dwellings
• Subdividing land into multiple titles
• Replacing an existing dwelling with higher-density housing (such as townhouses or apartments)
• Converting or redeveloping commercial buildings
• Delivering mixed-use projects

How Development is Different from Property Investment

Property investment typically involves purchasing an existing property to generate rental income – the focus here is on yield and cashflow. After holding the asset for an extended period, subsequent (but often unrealised) profit is also generated from long-term capital gains based on market movements.

Property development is a more active approach to value creation. It requires capital, a feasibility analysis, consultant and contractor coordination, as well as the ability to balance construction and market risks within defined timeframes. Returns are not simply based on the market. In fact, pricing stability is often favourable as it often means less fluctuation in feasibility assumptions. With the exception of a falling market, liquidity and sales activity can be more important than price growth.  Disciplined execution, tight cost control, and a sound exit strategy are key to completing a successful property development project. Making this possible is a well-structured development finance.

How Does Property Development Finance Work?

Unlike a standard home loan, development finance is structured around risk, project timelines, and feasibility. Lenders make assessments holistically, examining the whole development, which includes feasibility assumptions (both as costs and end values), developer experience, consultant and contractor experience, and exit strategy strength. Funding is centred around a mix of equity and layered debt known as the capital stack.

1. The Capital Stack

• Developer equity refers to the capital you contribute to the project, whether as land value or cash. Most lenders require a meaningful equity position to absorb risk and demonstrate commitment.
• Senior debt is the primary loan (first mortgage) facility used to fund land acquisition and construction. It is typically advanced as a percentage of total project cost and/or projected end value.
• Mezzanine finance (or subordinated debt/second mortgages) is a loan that sits behind the senior first ranking mortgage. It is often used to reduce the equity requirement of the developer making their equity go further. The increased leverage can also increase the return on equity metrics; however it also increases funding costs and overall risk associated with the project.

2. Feasibility and Funding Assessment

Before approving a facility, lenders assess the project’s financial viability in detail. This is where many first-time developers underestimate the scrutiny involved. Key metrics typically include:

• Total Development Cost (TDC): land, construction, professional fees, interest, and contingencies
• Gross Realisation Value (GRV): the projected end sale value of the completed project
• Loan-to-Cost (LTC) or Loan-to-GRV ratios: how much leverage is being applied

3. Land Funding vs Construction Funding

Development finance is often structured in two parts. The first is land funding, which supports site acquisition. Depending on timing and structure, this may later roll into the construction facility. The second is construction funding, which covers build costs and associated project expenses. This is usually approved based on completed designs, fixed-price build contracts, and confirmed feasibility. Some projects may require presales before construction funding is fully advanced, although no presale development finance is also viable, depending on the lender and project.

4. Progress Drawdowns During Construction

Unlike residential mortgages, development finance is not advanced as a lump sum. Construction funds are released in stages, aligned to completed works. Before each drawdown, lenders typically require:

• A quantity surveyor (QS) report
• Confirmation of milestone completion
• Updated cost-to-complete assessment

5. Exit Strategy

Every development loan is approved with a defined exit in mind.

Common exit strategies include:

• Selling completed dwellings and repaying the facility
• Refinancing into long-term investment lending
• Staged sell-down of a multi-unit project

Lenders assess the strength and realism of the exit plan as part of approval. Without a clear and achievable exit strategy, even a profitable project on paper may struggle to secure funding.

What Lenders Look for in Development Finance Applications

Development finance approval is driven by risk assessment. Lenders evaluate not just the project, but the developer’s ability to execute and exit successfully.

At ASAP Finance, we structure applications around the factors that materially influence credit decisions.

Experience and Delivery Capability

Track record matters. Lenders assess prior project experience, financial history, and the strength of the wider team – including builders and consultants. For newer developers, conservative project scope and strong professional support become more important.

Equity and Financial Position

A meaningful equity contribution demonstrates commitment and absorbs first-loss risk. Lenders review the source of funds, liquidity, and overall financial capacity to manage unexpected delays or cost increases.

Feasibility Strength

Projected sale values, build costs, timelines, and contingency allowances must be commercially realistic. Lenders will stress-test assumptions to ensure the project remains viable under pressure.

Exit Clarity

Every facility is approved with repayment in mind. Whether through sell-down or refinance, the exit strategy must be credible and supported by market evidence.

Structuring for Property Development Success with ASAP Finance

Development finance is ultimately about aligning risk, structure, and execution. The more disciplined the preparation, the stronger the funding outcome.

The most successful property development projects in New Zealand use an appropriate structure. From acquisition through to exit, every stage of a project carries financial implications. Central to managing risk and protecting margins is close coordination and a sound understanding of how development finance enables value creation.

At ASAP Finance, we work with developers to structure development and construction loans that support projects from site purchase through to completion. Our focus is on creating a financially sound framework aligned with your goals. If you’re considering a development or want clarity around how development finance works for your next project, get in touch with the team at ASAP Finance to discuss your plans.

When it comes to property development and construction finance, progress payments form the backbone of how funds are advanced throughout a project. For lenders like ASAP Finance, this is one of the most critical aspects of loan management – ensuring funds are released only as value is created on site, and almost always on a cost-to-complete basis.

The Basics of Progress Payments

A progress payment or “drawdown” (also known as a DD) refers to the staged release of loan funds throughout the construction or subdivision process. Rather than advancing the entire facility upfront, funds are released progressively as the project reaches agreed milestones. Note, payments are almost always made on a cost-to-complete basis (which we’ve covered in a previous blog How Cost-to-Complete Funding Works in Development ).

This structure ensures borrower equity is applied first to the project and that the lender’s loan facility is sufficient to complete the project.

What Lenders Look for in Drawdown Requests

Every drawdown request is assessed on a simple principle: “after paying the DD request, is the amount being retained by the lender sufficient to complete the project?”.

While there are a range of other considerations when making a payment, the lenders final decision will eventually tie back to that fundamental question.

Consideration for Lenders

Before approving a drawdown, prudent lenders will typically consider the following. In most cases, an independent Quantity Surveyor (QS) report will also be required, which addresses many of these points in greater detail.

• Budget review: the lender will review the full project budget to identify any areas where cost increases are known or anticipated. The aim is to ensure that after the requested payment is made, the lender remains sufficient funds on a cost-to-complete basis. This includes confirming appropriate allocation of contingency sums and factoring in forward-looking costs that may not have been fully identified early in the project.
• Evidence of progress: the lender may go to site or request photos confirming works done.
• Invoices from the main contractor and relevant subcontractors: for the raw build, some lenders may not require individual subtrade invoices and instead pay per the agreed milestones (however a QS will almost certainly ask for sub trade invoice and confirmation that all previous invoices have been paid)
• Program: lenders will assess whether the project remains on track against the approved program. Delays often translate directly into increased costs, this is because capitalised interest and fees form part of the overall funding facility and budget. If the revised completion date extends beyond the original term of the loan, the lender may require evidence that the borrower can cover any resulting shortfall, which may include an additional equity injection.
• Council inspection signoffs: Evidence that key council inspections have been passed, such as drainage, pre-line, or pre-roof stages. These provide independent verification that works completed on site meet the required building standards and align with the approved plans.
• Cost over-runs: If a drawdown request exceeds the value of the completed work, the lender may only approve a partial payment. This protects the lender from over-exposure if delays, defects, or cost overruns occur later in the build.

Site visits

As mentioned, expect your lender to undertake a site visit. Site inspections are an important step, providing a real-world check against what’s claimed on paper. They also give the lender valuable insight into the quality of workmanship and general site activity. A well-organised, well-resourced and active site signals good project management, while disorganisation or inactivity can indicate emerging risks, unpaid bills or potential delays.

Council Inspections

Council inspections play a critical role in the progress payment process, serving as an independent safeguard for both lender and borrower. Each passed inspection verifies that the works completed meet building code requirements.

In a residential build, inspections typically cover key stages such as foundations, framing, and pre-line etc. while subdivision elements focus on civil works such as earthworks, utilities connections, retaining, drainage and driveway (including vehicle crossing) sign offs.

These inspections provide independent assurance that all works are compliant and completed in line with approved plans. They also help confirm there are no outstanding or remedial items that could undermine the project’s cost-to-complete position or the security of the loan.

Greenfield Land Subdivisions

Green field subdivisions carry their own complexities. Unlike infill projects, where subdivision works are relatively minor and progress can be tracked through defined structural stages, greenfield projects centre on extensive civil and infrastructure works.

Because of this, milestone-based drawdown structures are often impractical. Lenders instead rely on engineering certificates and supporting invoices to verify progress and authorise drawdowns. Given the scale and variability of such works however, QS reporting is almost always required to maintain oversight and cost control.

ASAP’s Milestone-Based Approach

Unlike traditional banks, ASAP Finance does not require QS reports to fund most projects. Instead, we take a pragmatic, milestone-based approach that streamlines the process without compromising oversight.

Our progress payment schedule is typically structured around clear, definable stages such as foundation, framing, roof on, lock-up, interior completion and so on. Each milestone would correspond to a known percentage of total build cost, making it easier for developers and builders to forecast cashflow and align payments with real progress.

By removing the QS requirement, projects move faster, incur fewer third-party costs, all while maintaining robust checks and balances through council inspection reports and site verification.

Why Lenders Take It Seriously

A disciplined drawdown process is about more than just compliance – it’s about protecting project viability. By linking payments directly to verified progress and the project’s broader cost-to-complete position, developers maintain stronger control over cashflow, lenders safeguard their exposure, and projects stay on schedule.

ASAP Finance’s model strikes the right balance between efficiency and oversight, ensuring funds are advanced promptly while maintaining the integrity and financial stability of the project.

Conclusion

At ASAP Finance, we view progress payments as prudent management, not an administrative step. Each drawdown is carefully assessed to ensure the project remains in a full cost-to-complete position – protecting momentum, minimising risk, and keeping developments moving forward with confidence.

New builds are becoming an increasingly attractive option for property investors in New Zealand. With lower deposit requirements, exemptions from Reserve Bank restrictions, and strong demand for modern housing, it’s no surprise they’re gaining momentum again.

At ASAP Finance, as a specialist development lender, we’ve seen a surge in property development funding requests for new projects as both developers and investors move to take advantage of the current landscape. This article explores why new builds are getting attention and how you can leverage the trend.

Why Investors Are Choosing New Builds

The main reason investors are choosing new builds is the ease of securing funding. Lower deposit requirements and exemptions from LVR and DTI restrictions make them particularly attractive.

Under current Reserve Bank of New Zealand (RBNZ) loan-to-value ratio (LVR) rules, investors need a 35% deposit for existing properties. New builds, however, benefit from a carve-out in the BS19 framework which exempts them from both LVR and proposed debt-to-income (DTI) limits. In practice, this means there are no formal restrictions on leverage for new builds. Instead, banks apply their own policies – typically requiring a 10–20% deposit and capping lending at 80–90% LVR.

This carve-out specifically covers construction lending. It applies when a borrower is building a new home, purchasing a newly built home from a developer within six months of completion (often referred to as buying “off the plans”), or purchasing through the Government’s KiwiBuild programme. These situations fall within the exemption, giving lenders greater flexibility and investors more accessible leverage.

Furthermore, banks often provide more favourable incentives for new builds as well. These can include discounted rates (ANZ currently offers 0.60% off fixed and 1.25% off floating under their blueprint to build product), cashbacks of up to 1% from major lenders (ANZ, ASB etc), and green build incentives, including extra discounts and products for energy-efficient homes.

While the era of 1.99% mortgages is gone, new builds continue to benefit from competitive pricing, with floating rates for eligible borrowers around 5% depending on profile.

Where Are the Opportunities?

For property developers focused on the investor market, infill developments , particularly townhouses and terraces in established centres like Auckland, Hamilton, and Christchurch – remain the most in-demand product. Investors are looking for well-located, low-maintenance properties that appeal to tenants and deliver steady yields. This means product selection and design need to be geared towards what investors value most. Key considerations include:

• Transport connectivity – close to arterial routes, motorways, and public transport for commuting tenants
• Tenant appeal – proximity to employment hubs, education providers, and retail amenities
• Design efficiency – practical layouts, low-maintenance materials, and compliance with Healthy Homes standards
• Rental return – balancing build cost against achievable rents in the area
• Market absorption – ensuring supply levels of similar stock are not oversaturating the suburb
• Investor affordability – price points that fit within common investor LVR/deposit requirements
• Exit strategy – stock that can be sold down easily to multiple smaller investors, rather than requiring one large purchaser

Greenfield developments also present opportunities, especially in high-growth corridors like Rolleston, Pokeno, and Silverdale. However, developers need to carefully assess the target audience. Many greenfield subdivisions are driven by owner-occupier demand, which can leave investor stock harder to shift. Identifying which subdivisions have strong rental demand and investor appetite is critical to project viability.

ASAP Finance provides tailored development finance solutions for both infill developments (townhouses, terraces, and multi-unit projects in established urban areas) and greenfield subdivisions (large-scale residential projects in growth corridors). Our solutions include no-pre-sale construction funding, no valuations required, milestone-based drawdowns (no QS appointment needed), GST facilities, and serviced or capitalised interest options.

What to Watch Out For

New builds are not always the best fit for every investor.

• Limit scope for value-add – new builds offer limited potential for adding value through renovations, subdivision, or development. Most of the upside is already captured by the original developer, leaving future capital gains tied largely to broader market growth.
• Risk of oversupply – Large-scale property developments can flood local rental markets, leading to longer vacancy periods and delayed rental income.
• Over-capitalisation – Not every new build works as a rental. Higher-spec homes often deliver poor yields if the additional cost (or higher purchase price for the home) cannot be recovered through higher rents, leaving investors exposed to weaker cash flow.

In all situations, investors should focus on yield, location, and tenant demand rather than glossy brochures or IM’s.

Are New Builds a Good Investment?

They can be – but it depends on your strategy. If your goal is long-term passive returns, low maintenance, and taking advantage of favourable bank lending incentives, new builds are ideal. If your strategy is value-add, renovation-driven, or short-term flipping, then older properties may be more suitable.

Final Thoughts

The market has shifted. With lower deposit requirements, exemptions from LVR/DTI limits, and better bank lending incentives, new builds have once again moved from a niche play to a mainstream strategy for investors.

If you’re a developer looking to meet growing demand ASAP Finance provides flexible lending criteria with no pre-sales, no QS, and no registered valuations required.

Ready to take the next step?

Contact the team at ASAP Finance for fast, flexible funding tailored to new build projects.

At ASAP Finance, New Zealand’s leading non-bank property development lender, we’re reshaping the way developers access capital. With banks retreating from development lending, there’s an urgent need for faster, more flexible funding that aligns with the realities of modern construction. Developers today don’t need outdated hurdles, they need certainty, speed, and practical support.

Why pre-sales no longer make sense

Traditionally, pre-sales were used by lenders as a safeguard to mitigate risk. But in today’s environment, they’ve become a bottleneck—stalling viable developments not because the numbers don’t work, but because the pre-sale burden disrupts momentum and jeopardises funding.
Here’s how pre-sale hurdles can derail your project:

1. Costly delays: Mainstream lenders often require 60% or more of a project’s stock to be pre-sold before releasing any funds. That leaves developers in limbo, waiting months to secure pre-sales before breaking ground, while holding costs rise. Furthermore there is the risk of main contractors potentially walking away or extending programs as a result of commitments made elsewhere.
2. Margin erosion: Chasing pre-sale targets often means discounting to drive early contracts. In effect, you’re sacrificing profit to meet a lender’s comfort level – undermining the commercial return before the first slab is poured.
3. Market timing risk: Pre-selling locks you into today’s prices, not tomorrows. In a rising market, that means lost upside. In a falling one, buyers may stall or renegotiate at settlement, putting your repayment plan and the entire capital stack at risk.

The ASAP Finance approach: No pre-sale barriers

At ASAP Finance, we take a different approach. As a specialist lender focused solely on property development, our lending criteria is targeted towards our clients needs. We assess:

• The strength of your equity contribution
• Your track record and delivery capability
• The robustness of your construction contracts and cost controls
• Sensible exit strategies – beyond just selling off-the-plan

This allows us to fund well-structured developments without pre-sale requirements – so you can move forward faster and finish stronger.

We know that the true risk in development lies in execution, not in how many contracts you’ve signed at the concept stage. And with a growing range of alternative lenders in New Zealand, credible exit strategies now go well beyond traditional bank refinancing. For example: a development of 8 homes with just 2 early sales may be enough to reduce loan exposure, paving the way for a staged sell-down while transitioning to longer-term finance. The refinance market is well and truly alive.

No pre-sales ≠ no sales strategy

To be clear: just because at ASAP Finance we don’t require pre-sales, doesn’t mean you should avoid them altogether. Instead:

• Plan ahead
• Understand your product and market
• Build a sales strategy that supports (not delays) your delivery timeline

In a slow market, having some sales secured before completion is essential for debt reduction on a fully drawn development loan facility. This requires a strategic sales and marketing plan running in parallel with construction – not left until the end.

Timing sales depends on the product. High-end homes, for instance, often sell better once completed and staged. But pursuing a “no pre-sales” strategy adds risk, and should only be considered by experienced developers who understand local demand patterns and buyer behaviour.

As one seasoned developer recently told us, “Sales solve all problems.” While this is not true in absolute terms, there is strong substance the message. Even if a project faces cost overruns or delays, strong sales cover provides reassurance to lenders and buffers your funding position.

Rethink the pre-sale dependency

Pre-sales are a bank requirement – not a development necessity. In fact, in some internationally markets, main banks commonly fund property developments without pre-sales. However dismissing sales entirely is a mistake as discussed. “No pre-sales” funding is not a free pass to ignore your sales pipeline. If your project is viable, you deserve a lender who gets what matters most: execution, experience, and speed.

Why developers choose ASAP Finance

ASAP Finance is New Zealand’s trusted non-bank lender for residential, commercial, and subdivision developments. We fund projects from $500,000 to $50,000,000 with:

• No pre-sales required
• No valuations
• No QS appointment

If your project is stuck waiting on pre-sales, it’s time to talk to a lender that funds differently.

Property development finance. Done fast. Done right.

When we receive a development funding enquiry, the first question we usually get asked is:

“What are your rates and fees?”.

It’s a fair question – but comparing lenders isn’t that simple.

Two lenders may offer similar rates and fees but deliver vastly different client experiences, structure those charges differently, and impose terms and conditions that significantly impact the actual cost of funding.

Beyond that, these differences can materially affect how and when you access your development loan. They also shape the overall borrowing experience and, ultimately, your ability to keep the development moving and bring it to a successful completion. In this blog, we look beyond the headline figures and explore what makes a good term sheet.

Rates and Fees

We’ve talked about pricing in plenty of detail elsewhere, but it’s worth touching revisiting – for many developers, rates and fees are still the first thing they look at when choosing a lender.

The headline numbers, though, rarely tell the full story. Lenders might quote a low interest rate and a small monthly line fee to mask what is a high IRR loan when annualised and combined with the establishment fee. Others may have fixed extension fees irrespective of what the additional required term is, or early repayment fees that only show up when timelines shift or settlements happen ahead of schedule.

Line fees should be carefully considered, particularly in cases where there is no initial cash advance against the land (i.e., the land is unencumbered). If your project is delayed due to unmet pre-drawdown conditions, line fees may still accrue based on the full facility limit. This is an important distinction to – interest is typically only charged on the drawn loan balance, whereas line fees apply regardless of drawdown activity.

That’s why it’s important to look beyond just “what’s the rate” and instead focus on how fees are structured. The true cost of funding comes down to the detail – and how those details line up with the realities of your project.

Terms and Conditions

In our view, the terms and conditions (T&Cs) are equally as important and should be scrutinised in the same manner. While interest rates and fees can be comparable across similar lenders, T&Cs are where differences truly show up – and those differences can make or break a project.

You’ll typically see the T&Cs in the form of:

Conditions precedent (CP): These must be satisfied before the loan is drawn down. They’re the lender’s way of ensuring all key information and requirements are in place before releasing funds. Common CPs for development loans include consents and plans, insurances, KYC and AML documentation, development programs, construction contracts, presale agreements and more.

Ongoing conditions: These must be maintained throughout the loan term. They might include regular reporting such as QS reports to facilitate progress drawdowns, filing of GST returns, submission of council inspection reports and generally ensuring the project adheres to key timelines. Think of these as the operating rules of the loan.

Conditions subsequent (CS): These are obligations that must be met after the loan has been drawn. These are less common and are usually used by lenders as a means to control or mitigate risk. Pre-sale hurdles or targets are the best example of this, along with deadlines for council sign offs or compliance requirements.

Lastly, any CPs that the lender waives during part of the initial settlement process typically fall to become a CS. Note, this is always at the lenders discretion so its best to satisfy CPs in full before the settlement date.

Meeting your obligations as a borrower

In property development the stakes are high and failing to meet a loan condition can have serious consequences: it might delay settlement, delay or prevent progress payments, or even trigger an event of default – giving the lender the right to cancel the facility or demand immediate repayment.

As a developer, ask yourself:

1. Are the conditions reasonable?
2. Can I deliver on what is being asked of me, within the timeframe that is required.

The thought process here needs to be broad and needs to extend to all parties that may be involved in the process.  It’s not just about the loan terms – it’s about execution. For example;

If a lender imposes a post-settlement condition requiring a council sign-off by a certain date, you’ll need to:

• Ensure your contractor prioritises the required work
• Understand what reports or documentation may be needed to support the application to council
• Account for council processing times
• Build in a buffer for delays

Failure to manage these moving parts can result in missed deadlines, breached conditions, and a risk to the project’s success.

Remember, funders place great weight on a borrower doing what they’ve promised to do. Losing the support of your funder can trigger major issues, often requiring a refinance under pressure. As a lender, we regularly receive refinance applications from clients who have run into trouble after failing to meet their stipulated conditions precedent (CPs) or conditions subsequent (CS) from their previous development funder.This highlights the importance of a clean, well-understood term sheet that sets clear and achievable expectations from the outset.

What Makes a Good Term Sheet?

A “good” term sheet is one that enables flexibility, aligns with your development timeline, and limits surprises. It doesn’t mean there are no conditions—it means the conditions are clear, realistic, and manageable. A lender offering simple, transparent terms with minimal red tape can often be a better partner than one offering a cheaper loan but hiding behind layers of complexity.

If you’re looking for development finance and want to work with a lender who values clarity and backs your ability to deliver, get in touch with the team at ASAP Finance.

Property development is a complex process that demands strategic planning, careful risk management, and access to the right funding solutions at every stage. The funding cycle typically consists of four key phases: Pre-Purchase, Consenting, Settlement, and Development. Each phase comes with its own unique challenges and funding considerations. Here, we break down the critical stages of a project and their funding requirements.

(1) Pre-Purchase

During the early stages of a project, most costs are funded through cash equity. At this point, there’s no security to obtain external funding (such as a mortgage), and the risks associated with the project are higher. This stage is about validating the assumptions in your feasibility study.

Your equity should cover two critical areas:

1. Due Diligence: This includes liaising with planners on bulk and location studies or consulting engineers about a site’s infrastructure limitations. Many developers hesitate to spend money on due diligence before going unconditional on a property, but it’s often the best investment you can make. Spending a few thousand dollars upfront to avoid a bad project is a win.
2. Deposit Payment: When declaring the contract unconditional, the agreed deposit—usually 10% of the purchase price—must be paid. This is almost always funded by the developer’s own equity.

(2) Consenting

Consenting typically begins immediately after the contract goes unconditional. Like other pre-development milestones, these costs are generally funded by the developer. Note, these expenses are still considered by funders (along with other consultant costs) when calculating the project’s loan-to-cost ratio at the development stage.

Timing is Key: Aim to complete as much of the consenting process as possible before settling the property. The process can take up to nine months, depending on the complexity of the project and council requirements.

Deferred Settlement Advantage: Securing deferred settlement terms can be highly beneficial. This allows the vendor to carry the financing costs while you navigate the consenting process, reducing the financial strain on your end.

(3) Settlement of Property

The settlement phase is a significant milestone and often the first point where external funding is triggered. Developers typically adopt one of two strategies:

1. Maximising Leverage: Inject minimal equity into the land settlement to preserve capital for other project needs, such as initial enabling works.
2. Reducing Funding Costs: Inject maximum equity (cash) into the land settlement, ensuring the development funder will finance the project (including enabling works) as part of their facility.

Land Settlement Funding: Loan-to-Value Ratios (LVRs) for development land are typically around 60%, reflecting the higher risk compared to completed properties. One of the reasons for this is because land values are particularly sensitive to market fluctuations; for instance, a 10% drop in house prices can result in a 30% decrease in land value.

Strategic Lending Decisions: Low-cost funders, such as banks or “near-bank” lenders, are often used for the land settlement if the site is not consented or shovel-ready. However, if deferred settlement terms are close to the commencement of work, developers may settle directly into a development facility, establishing an early strategic partnership with a development lender and ensuring a smoother project transition.

Development Phase

The development phase involves the largest equity injections, making it the most critical stage of the project. Developers who inject significant equity during settlement often find development funding easier to secure. Those relying on high-leverage land facilities may face additional hurdles, such as:

1. Debt Reduction: Re-settling into a development facility by reducing existing debt.
2. Completing Enabling Works: Reducing the cost-to-complete by finishing initial works, such as ground preparation or drainage.

How Should Equity Be Injected?

As a lender, it’s our preference to fund 100% of the cost-to-complete, reducing any existing lending to unlock the development loan facility. This gives us transparency over how the construction phase of the project is to be funded (and paid for).

However, a development facility might include a refinancing of an existing loan and a cost-to-complete facility that assumes some initial work has already been done. This approach shortens the development program and minimises the period non-bank funding is required; however, it can catch developers out if funding is not obtained in time for the next stage of the project.

Ultimately, the best solution depends on the developer’s experience and ability to manage the project.

What If More Leverage is Needed?

While there’s no substitute for cash equity, the following strategies can help stretch your resources:

• Securing Pre-Sales: Pre-sales validate the project’s price point and provide lenders with a clear exit strategy. This can increase willingness to offer better terms.
• Validating High-Risk Cost Items: Completing initial groundworks or other risky tasks upfront can provide lenders with greater confidence.
• Releasing Value Early: Obtaining freehold titles early can allow you to restructure debt and kick-start portions of the project.
• Staging the Project: Breaking the project into stages reduces overall funding requirements and aligns with traditional funding metrics over time.

Conclusion

The property development funding cycle involves navigating multiple stages, each with unique challenges and requirements. From pre-purchase to project completion, developers must carefully balance equity injection, risk management, and lender expectations. Strategic decisions at each stage can significantly impact the project’s viability and profitability. By understanding the intricacies of the funding cycle and partnering with the right financial institutions, developers can position themselves for success in a competitive market.

For more info, reach out to our Lending Team.

The property development landscape is constantly evolving, and in today’s climate, developers are facing a unique set of challenges that are reshaping the way projects are planned, financed, and executed. From regulatory hurdles to surplus residual stock, understanding these obstacles is crucial for navigating the industry successfully.

After speaking with our clients, we thought we’d provide an update on some of the key challenges developers are currently facing.

Pricing and Affordability

• It’s no myth that perhaps the biggest influence on property prices is interest rates. Rising interest rates have increased loan servicing costs for both owner-occupiers and investors. With higher borrowing costs, purchasers can afford to borrow less, which directly impacts property prices.
• Buyer profiles are shifting. A purchaser who might have considered a $1M property a year ago may now be limited to an $800K budget due to current interest rates.
• This makes the price point of your product one of the most important considerations for today’s buyers. Developers must understand their target market, what’s important to them, and how to deliver value while keeping prices attractive.
• Not all news is bad—all major banks are forecasting further OCR cuts, which should lead to lower mortgage rates and servicing costs.
• Selling remains tough, but a common theme among our clients is that well-designed, well-built, and appropriately priced developments continue to sell—though agents are having to work harder. In contrast, projects with poor design and substandard quality are struggling to attract buyers.

Surplus Stock and Increased Competition

• The past few years of booming development pipelines have led to an oversupply of certain types of stock, making it harder to stand out in the market.
• This increase in stock, give buyers more choice, and comparing one project to another project has never been easier. Developers with generic or poorly positioned projects are facing greater challenges in sell-downs, while those who differentiate their product—through quality, pricing, or design—are still transacting successfully.
• As a property developer, you must have a competitive mind set.  You are competing against other property developers to deliver the best product to market.

Increased Regulatory and Compliance Burdens

Navigating the regulatory environment has become more complex, with councils imposing stricter requirements on developers. Resource consents, zoning changes, and infrastructure contributions have added significant costs and delays to projects.

• Higher Infrastructure Costs – Developers are being asked to contribute more towards infrastructure upgrades, increasing costs at both the local council level and through large utility providers.
• The Utilities Monopoly Problem – Large utility providers, operating without effective competition, continue to issue excessive invoices—only to reduce them when challenged. We’ve seen numerous cases where a utility provider has dramatically overquoted costs, only for a developer to find a much cheaper solution when proactively exploring alternatives.
• Due Diligence is Key – The Auckland Watercare red zone debacle is a prime example of council failures impacting developments. Large-scale infrastructure limitations were imposed with little warning, catching developers off guard. The takeaway? Due diligence is everything. Leave no stone unturned in ensuring your site is developable.
• Consenting Delays Continue to Worsen – Despite improvements in other parts of the development cycle (labour, materials, funding availability), council approval times continue to get worse.
  • Consent processing times remain insanely long.
  • COA, EACC, s224c, and title processing now take up to a month each, adding up to four months of delays.
  • Active engagement with council is critical – developers must push the process along.

The Good News

While these challenges persist, there are plenty of opportunities for well-prepared developers who can adapt to the changing landscape.

• Stability and Predictability in Pricing – The era of sharp price declines appears to be over. Developers who price their product well and focus on quality are still seeing solid demand.
• Lending Conditions Have Loosened – There’s good availability of development funding, with lenders actively looking to allocate capital. This means:
  • Better rates
  • More flexible terms
  • Higher leverage
  • In short, lenders may be willing to lend you more for cheaper.
• It’s a Good Time to Build – With many pipelines slowing down, there’s now surplus capacity in the construction sector. This benefits developers in two key ways:
  • Competitive pricing – With fewer projects in the pipeline, developers have stronger negotiating power.
  • Improved project efficiency – Managing sub-trades is easier, and developers are seeing better program delivery. Contractors are now completing projects on time or even early—a stark contrast to a few years ago when liquidated damages were the industry norm.

 Final Thoughts

Property development is never without its challenges, but developers who are strategic, adaptable, and proactive will continue to find success.

At ASAP Finance, we understand the evolving landscape and provide flexible funding solutions that help developers secure opportunities, navigate market challenges, and keep their projects moving forward.

📞 Contact us today to discuss how we can support your next development – 0800 272 756.

In property development, assembling a team of technical and strategic experts is only part of the equation. While professionals like planners, architects, and contractors lay the groundwork for your project, having a skilled financial and legal team ensures you can navigate the complexities of funding, legalities, and market positioning.

In this continuation, we explore the indispensable roles of Accountants, Lawyers, Real Estate Agents, Valuers, Quantity Surveyors, and Financiers—professionals who provide the financial insight, legal assurance, and market savvy to propel your project to success.

6. Accountant

Accountants are at the heart of your project’s financial structure, guiding you through key decisions that shape your development’s profitability. From determining whether to register for GST to advising on the best legal entity for your project—be it an LLC, LP, or Trust—accountants ensure that your structure aligns with your financial goals while remaining tax-efficient. These decisions need to be made before committing yourself to a particular path, as it can be difficult and costly to unwind once you’ve set things in motion.

By engaging a property-focused accountant early, you can optimise your tax liabilities, protect your profit margins, and ensure that every financial decision supports your overall development strategy.

7. Lawyer

A lawyer is your shield in the complex legal landscape of property development. Their expertise spans reviewing sale and purchase agreements, facilitating settlements, and ensuring that funding agreements from financiers are clear, favourable, and align with your project goals. They also meticulously scrutinise construction contracts and other critical documents to safeguard your interests and protect against potential liabilities.

That said, it’s important to remember that your lawyer is a backstop—not your first line of negotiation. As a developer, it’s critical to develop an understanding of key legal concepts yourself. This enables you to negotiate the best deal upfront, leaving your lawyer to refine and approve it. Ignoring these concepts makes it difficult to structure deals effectively and can lead to missed opportunities.

When it comes to property development, the buck stops with you. Ultimately, all liability rests with you as the developer, so you must take ownership of the process, read every document carefully, and fully understand what you’re committing to before signing.

8. Real Estate Agent

Real estate agents do much more than simply sell properties. They are instrumental in ensuring your development is marketed effectively, priced competitively, and positioned to attract the right buyers. A great agent brings access to an extensive database of potential buyers and can directly promote your property, accelerating sales and boosting market visibility.

Beyond sales, their market insights allow you to refine pricing strategies and meet buyer expectations, ensuring your development achieves maximum profitability while staying competitive.

9. Valuer

Valuers are a critical tool for assessing the current and future market value of your development. For many projects, a valuation report is essential for securing main bank financing. While first-time developers can greatly benefit from having a valuer undertake a report, experienced developers often take this process in-house. As a developer, you should have a deep understanding of your product and price point, enabling you to confidently assess your project’s value.

At ASAP Finance, we simplify this process by eliminating the need for external valuation reports. Instead, we conduct our own internal valuations using our extensive in-house sales data—leveraging insights from delivering over 1,000 houses annually. This approach not only reduces administrative burdens but also allows you to focus on progressing your development with fewer delays, creating a more streamlined and efficient experience from start to finish.

10. Quantity Surveyor (QS)

A Quantity Surveyor is the financial gatekeeper of your construction phase, overseeing labour and material costs to keep your project within budget. Their expertise helps prevent cost overruns while ensuring that resources are sourced efficiently.

At ASAP Finance, we take a milestone-based approach to streamline this process. For every project, we prepare a cost-to-complete schedule that outlines available funds and their release timelines. This scalable system can fund projects with up to 50 houses or more, all without requiring an independent QS. By simplifying cost management, developers can maintain financial clarity and momentum.

11. Financier

A good financier is more than just a source of capital—they are a strategic partner in your project. Building a strong, long-term relationship with a non-bank financier can be the key to unlocking opportunities and getting deals across the line that might otherwise fall through. Unlike traditional banks, where managers frequently change, long-term relationships with non-bank financiers can mean access to more leverage, flexible pricing, and preferred treatment.

Experienced financiers understand the intricacies of property development. They don’t just provide funding—they offer valuable guidance when challenges arise and can facilitate resolutions between contractors, engineers, and other stakeholders. Their insights and support can help keep your project on track and avoid costly delays.

Beyond competitive interest rates, the best financiers offer flexibility in their terms. Waiving pre-sale requirements or removing QS oversight, for example, can accelerate your timelines and reduce costs, giving you more freedom to execute your vision.

At ASAP Finance, we take this approach further by considering the broader picture of your project. With an in-depth understanding of property development, we help you navigate complexities, streamline processes, and unlock opportunities for growth—ensuring that your project reaches its full potential

Summary

In property development, the right financial and strategic team is just as critical as the technical experts who lay the foundation. With accountants, lawyers, agents, valuers, QS professionals, and financiers working together, you create a comprehensive support network that protects your project, maximises returns, and ensures its long-term success.

Whether your project is small or large, partnering with professionals who understand the nuances of property development is key to standing out in a competitive market and achieving sustainable growth.