High-Value Property Development Finance: Everything You Need to Know
Large-scale property development projects are vital to Australia’s economic growth, shaping the future of cities, infrastructure, and communities. However, these projects require significant financial backing, often beyond the reach of individual investors or developers. This is where high-value property development finance comes into play.
Securing the right financing is essential for acquiring land, construction, and project completion, ensuring developers have the capital required to meet project milestones. In this guide, we’ll break down what high-value property development finance is, the different funding options available, and how to secure the best financial structure for your project.
What Is High-Value Property Development Finance?
High-value property development finance refers to funding solutions designed to support large-scale real estate projects. These include:
🏢 Commercial developments – Office buildings, shopping centres, and mixed-use spaces.
🏗 Residential projects – Apartment complexes, townhouses, and multi-unit developments.
🌆 Industrial and infrastructure developments – Warehouses, logistics hubs, and public-use facilities.
Unlike standard mortgages, development finance is tailored to fund each stage of the project, from land acquisition to final completion. This ensures developers have continuous access to capital throughout the construction process.
Types of High-Value Property Development Finance
There are multiple ways to fund large-scale property development, and the right financing structure depends on factors like project size, risk, and cash flow projections.
1. Senior Debt Financing
Senior debt is the primary loan used for property development. This is a secured loan, meaning the lender holds the property as collateral.
✅ Loan-to-Value Ratio (LVR): Typically 60-80% of the total project cost.
✅ Repayment Terms: 12-36 months, often with interest-only payments during construction.
✅ Risk Level: Lower risk for lenders due to collateral security.
Best For: Developers looking for a large capital injection with stable repayment terms.
2. Mezzanine Finance
Mezzanine finance is a secondary loan that bridges the gap between senior debt and the developer’s equity. It allows developers to borrow additional funds without diluting ownership.
✅ LVR: Up to 90% of the project’s total cost.
✅ Interest Rates: Higher than senior debt, typically 8-15% due to increased risk.
✅ Repayment Terms: Usually repaid after the senior loan.
Best For: Developers needing extra funding to reduce upfront capital investment.
Example: A developer securing $50M in senior debt but needing an extra $10M in mezzanine finance to complete funding.
3. Equity Financing (Joint Ventures & Private Investors)
Equity financing involves raising capital through investors instead of taking out a loan. Investors provide funds in exchange for a share in the development’s profits.
✅ No Fixed Repayments: Unlike loans, investors are compensated through profit-sharing.
✅ Risk Sharing: Investors take on project risks alongside the developer.
✅ Best For: Large-scale developments where risk is high, and capital needs exceed loan limits.
Example: A $100M luxury apartment project where a private equity firm funds 30% in exchange for a share of future sales.
4. Bridging Loans
Bridging loans provide short-term funding to cover immediate costs while long-term financing is secured.
✅ Loan Term: 6-12 months.
✅ Best For: Developers needing quick access to capital for land acquisition or project startup costs.
Example: A developer purchases land with a bridging loan while awaiting approval for senior debt financing.
5. Construction Loans
Construction loans provide funding specifically for the building phase of development. Funds are released in stages, ensuring that money is available when needed.
✅ Loan Disbursement: Payments are made in tranches based on project milestones.
✅ Interest-Only During Construction: Developers only pay interest until project completion.
Best For: Projects that require structured funding aligned with the construction timeline.
Key Considerations for Securing Property Development Finance
1. Feasibility Studies & Market Demand
Lenders assess the viability of your project before approving funding. A detailed feasibility study should include:
📈 Market analysis – Demand for the property type in the location.
📊 Projected sales/rental income – Expected returns upon completion.
🏗 Development timeline – Stages of project execution.
Pro Tip: A comprehensive feasibility study increases lender confidence and improves loan approval chances.
2. Loan-to-Cost (LTC) & Loan-to-Value (LVR) Ratios
Lenders determine funding amounts based on:
• LTC: Percentage of the total project cost that can be financed (e.g., 70-80%).
• LVR: Ratio of loan amount to the property’s value (e.g., 60-80%).
Higher LVR = Higher Risk = Stricter Loan Terms
Example: If a project costs $50M and a lender offers 80% LTC, the developer must contribute $10M in equity.
3. Pre-Sales & Pre-Leasing Commitments
Lenders often require pre-sales (residential) or pre-leasing agreements (commercial) to reduce risk. This proves demand for the project and guarantees future income.
✅ Pre-Sale Targets: Some lenders require 50-70% of units to be pre-sold before funding approval.
✅ Anchor Tenants: Long-term lease agreements with major tenants enhance financing prospects.
Example: A mixed-use development with 50% of retail spaces pre-leased is more attractive to lenders.
4. Exit Strategy for Loan Repayment
Lenders want assurance that the loan will be repaid through:
✔ Sales of developed properties (for residential projects).
✔ Refinancing into long-term investment loans (for commercial assets).
✔ Rental income for long-term stability.
Pro Tip: Having multiple exit strategies makes your application stronger.
Case Study: Securing Finance for a Large-Scale Development
Project: A $120M commercial office development in Melbourne.
Challenge: The developer needed funding to cover land purchase, approvals, and construction costs.
Solution:
📌 $85M in senior debt financing (70% LTC).
📌 $20M in mezzanine finance to reduce capital contribution.
📌 $15M in equity investment from a joint venture partner.
Outcome: The project secured 100% funding while minimizing upfront developer capital.
How DeMarque Finance Supports Property Developers
At DeMarque Finance, we specialise in tailored financing solutions for large-scale property developments, offering:
🔹 Access to Top Lenders – Partnering with banks, private lenders, and equity investors.
🔹 Structured Loan Solutions – Custom financing for each stage of development.
🔹 Fast Approvals & Competitive Rates – Ensuring projects move forward without delays.
🔹 Expert Advisory Services – Helping developers maximise funding efficiency.
Conclusion
High-value property development finance is essential for funding large-scale residential, commercial, and industrial projects. Understanding the different financing options—senior debt, mezzanine finance, equity funding, and construction loans—ensures developers secure the right capital structure.
At DeMarque Finance, we help developers navigate complex financial landscapes, providing tailored solutions for long-term success.
🔹 Need funding for a large-scale property development? Contact DeMarque Finance today to explore your options and secure financing that fits your project’s needs.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal, nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced, or republished without prior written consent. © DEMARQUE GROUP PTY LTD 2025. All rights reserved.
