Development finance for property development refers to the specialized funding and financial services provided to real estate developers and investors to support the construction or redevelopment of property projects. It is a form of financing designed to meet the unique needs and challenges of property development ventures.
Whether you are an experienced property developer or somebody looking for a first-time project, we are here to discuss and advise you on how you can fund the scheme.
Typical types of projects include:
- Housing developments from single units to large sites
- Apartments and flats
- Part-completed developments
- Conversions – residential and commercial
- Commercial developments
Key features of development finance for property development include:
Project-specific funding: Development finance is tailored to individual property projects, taking into account factors such as the scale of the development, construction timeline, and projected returns.
Risk assessment: Lenders or financial institutions offering development finance assess the viability and potential risks associated with the project, including market conditions, construction risks, and the capability of the developer.
Loan structure: Development finance is usually structured as a drawdown facility, where funds are released in stages as the development progresses. This reduces the financial burden on the developer and aligns funding with project milestones.
Mezzanine finance: In some cases, developers may use a combination of equity, senior debt, and mezzanine finance. Mezzanine funding is usually provided by specialist lenders where this element of funding is used to top up the senior debt and equity.
Exit strategy: Lenders may require a clear exit strategy, ensuring that the developer has a plan to either sell or refinance the property upon completion to repay the development loan.
Experience and track record: Developers' experience and track record play a significant role in obtaining development finance. Lenders prefer to work with experienced developers who have a successful history of completing similar projects. But don’t worry if you are a first-time developer, we can still help you find suitable funding.
Overall, development finance for property development enables real estate developers to undertake ambitious projects that might otherwise be beyond their immediate financial capabilities. It plays a crucial role in supporting urban development and meeting the demand for new or improved properties in various markets.