How Many Presales Do You Need for Development Finance?

The Presale Question Every Developer Asks

At some point in almost every development finance conversation, the question comes up: how many presales do I need?

The honest answer is: it depends — but not in the vague, unhelpful way that phrase is usually meant. It depends on specific, identifiable factors: your project size, your lender type, the strength of your feasibility, how much equity you're putting in, and how credible your sales strategy looks on paper.

This article breaks down what lenders actually require, why the thresholds vary so much, and why blindly chasing presales before you've structured your finance can put your project at risk.

The Short Answer by Lender Type

Presale requirements sit on a spectrum. At one end, major banks — which tend to be the most conservative. At the other, private lenders who can move without any presales at all under the right conditions.

Major Banks (Big 4 and Tier 2)

Major bank presale requirements are not fixed. They vary by institution, by internal credit policy at the time of application, and significantly by project size.

For smaller developments — broadly, projects with a Total Development Cost under $20M — major banks and some regional lenders will consider lending with minimal or no unconditional presales, provided the right conditions are met:

• A strong, independently assessed feasibility with conservative GRV assumptions

• A credible sales and marketing plan — agent appointments, comparable sales evidence, absorption rate analysis

• Meaningful developer equity in the deal (typically 20–30% of TDC as a minimum)

• A track record of comparable completed projects

For larger projects — particularly those above $20–30M in TDC, or those in thinner markets — the same banks will apply firmer presale coverage ratios, sometimes requiring presales covering 80–100% of the senior debt facility before first drawdown.

The key point: there is no universal rule. Different banks have different internal appetite at any given time. What one bank declines without presales, another may approve based on the quality of the feasibility and the developer's balance sheet.

Non-Bank Construction Lenders

Non-bank lenders are generally more flexible than the major banks, but they are not presale-free by default. Many non-bank construction lenders will require at least one or two unconditional presales — not necessarily to cover their full debt exposure, but as a market validation signal.

Here's the problem with this: requiring presales, even just one or two, can force developers to sell too early — often before the project is fully designed, before the marketing campaign has run, and before buyer confidence is at its peak. Early presales typically mean discounted pricing, and discounted presales flow directly into your feasibility, reducing your GRV and potentially your approved loan amount.

A single presale that validates market demand for the lender but is written at a 5–8% discount to peak pricing can cost significantly more than the marginal difference in interest rate between lenders.

Private Lenders

Private credit lenders — family offices, private credit funds, high-net-worth syndicates — are the most flexible on presales. Many will lend on the strength of the feasibility and equity alone, with no presale requirement at all.

This comes at a cost: private rates are higher than bank or non-bank rates. But for a project where the developer has strong equity, a sound feasibility, and doesn't want to discount product to satisfy a lender's presale tick-box, private credit can be the right tool — particularly at the site acquisition or early construction phase, with a refinance to a cheaper lender once presales are achieved at full pricing.

What Matters More Than the Presale Number

Lenders who understand development finance know that a presale number in isolation tells them very little. What they're actually trying to answer is a simpler question: if this project doesn't sell as planned, what is our exposure?

That question is answered by:

• Feasibility quality: Is the GRV assumption conservative? Has it been independently assessed? Does it account for realistic selling costs and agent commissions?

• Equity position: How much of the developer's own capital is at risk ahead of the lender's? Higher equity reduces the lender's loss-given-default even with zero presales.

• Sales strategy credibility: Is there a appointed agent with relevant comparable sales? Is there an absorption rate analysis? Is the product type and price point aligned with demonstrated local demand?

• Project type and location: Boutique residential in inner Canberra reads very differently to a 60-lot medium density in a fringe growth corridor. Lenders discount their confidence in the latter's GRV, which is why they want more presale coverage to compensate.

• Developer track record: A developer who has delivered comparable projects on time and on budget is a different risk profile to a first-time developer, regardless of presale count.

The Risk of Chasing Presales at the Wrong Time

One of the most common mistakes developers make is treating presales as a finance prerequisite to be collected as quickly as possible, rather than as part of a deliberate sales strategy.

Selling off-the-plan before your design is finalised, before your marketing materials are complete, and before there's any market momentum typically means one or more of the following:

• Lower prices than the market would ultimately support

• Buyers who are price-sensitive rather than quality-motivated — higher rescission risk

• Locked-in contracts at prices that your feasibility then has to be built around

In some cases, a developer would be better off structuring finance with a private or non-bank lender that doesn't require presales, running a proper sales campaign at the right time, and then refinancing once unconditional contracts are in place — even if the blended cost of finance is marginally higher during the construction period.

How to Structure the Finance Conversation

The right approach is to work backwards from your project, not forwards from a lender's checklist.

Start with your feasibility and equity position. Understand what that tells a lender about their downside exposure. Then approach the market — bank, non-bank, and private — and let the presale question be part of the overall structure, not the entry gate.

We work with developers at all stages of this conversation — from early-stage feasibility review through to refinancing post-presales. If you want a frank view on where your project sits and what the realistic presale conversation looks like with lenders, we're happy to have that discussion without obligation.