Property Development Finance in New Zealand
Property development finance has been one of the toughest parts of the property market over the last few years. Rising interest rates, high land prices, and construction costs have made it harder for developments to stack up, while banks have become more cautious about what they’ll fund.
On this episode of About the Green, I sat down with James Beale, a specialist adviser who works exclusively in property development finance, to break down what’s really happening behind the scenes — and what developers need to know before approaching lenders.
What’s Been Holding Developments Back?
According to James, three things have made development finance particularly challenging:
Higher interest rates increasing overall project costs
Land and construction prices rising faster than sale values
Pre-sales becoming harder to secure in softer markets
In many cases, projects that once looked profitable simply didn’t stack up on paper anymore. That combination pushed a lot of developers to pause or rethink projects altogether.
A Shift in Lender Behaviour
One positive change is that lenders have started adapting.
Where banks previously required high levels of pre-sales before funding a development, many are now willing to proceed with lower pre-sale requirements, or in some cases no pre-sales at all, depending on the strength of the project and the developer.
Non-bank lenders have also become more competitive, particularly for:
Smaller multi-unit developments
Experienced developers with strong equity positions
Projects where speed and flexibility matter more than pricing
This has opened up new funding options for developers who would have struggled under old lending rules.
What Lenders Actually Look At First
Despite all the numbers involved, James explained that development funding still comes down to two core questions:
Who is the developer?
What is being built?
If lenders are comfortable with the developer’s experience and believe the product will sell, they’re far more likely to engage. From there, they’ll assess:
Project feasibility and profit margins
Equity contribution
Budget accuracy and contingency allowances
Builder experience and fixed-price contracts
Consents and regulatory approvals
Without full council consent, most lenders won’t proceed at all.
Equity: The Biggest Sticking Point
The most common challenge developers face is equity.
Banks generally want developers to contribute more capital to each project, while developers often want to preserve equity for future opportunities. That tension is where many deals fall over.
Higher equity typically reduces risk for the lender, but it can slow a developer’s ability to scale. Structuring finance correctly becomes critical if a developer wants to keep moving from project to project.
Pre-Sales: Still Important, Just More Flexible
While pre-sales are still relevant, they’re no longer always a deal breaker.
Depending on leverage and project quality, lenders may accept:
Partial pre-sales (25–50%)
No pre-sales for strong developments
Higher interest margins instead of pre-sale requirements
This flexibility has helped projects progress that otherwise would have stalled.
Bank vs Non-Bank Development Finance
James highlighted that both options play an important role:
Banks generally offer cheaper pricing but stricter requirements
Non-banks offer flexibility, speed, and higher leverage
Some projects start with non-bank funding and later refinance to a main bank once risk reduces and values are realised.
Why Developers Use Finance Advisers
The development lending market changes constantly. Lenders come and go, appetites shift, and policies update frequently.
Developers who rely on one or two banking relationships often miss better opportunities elsewhere. A specialist adviser provides:
Access to the full lending market
Better structuring options
Insight into current lender appetite
Negotiation power on pricing, equity, and conditions
The goal isn’t just to get funding it’s to get the most efficient finance structure for the developer’s long-term goals.
Final Takeaway
Property development finance in New Zealand is still available but it’s more nuanced than ever.
Developers who understand lender expectations, structure projects properly, and work with the right advisers are still getting deals across the line, even in challenging conditions.
As James put it, if a project has the right people and the right product, lenders will always be willing to take a closer look.