Strategic Finance for Property Development
Strategic Finance
for Property
Development
Frameworks, tools and handbooks for project owners, executives and finance teams, to answer the most important question on every project: will the money last from the day the land is bought until transfer day?
- Land
- Funding
- Construction
- Transfer
- Exit
- Peak Equity
- Lowest point of the curve
- Project IRR
- Project return
- DSCR
- Debt service capacity
- 151Knowledge Base articles
- 5project stages
- 22Calculators
- 4In-depth Handbooks
01 — Approach
Read in 4 steps
Each step builds on the one before, from understanding the cash cycle to the in-depth handbooks
- 01Understand the overviewHow project cash rises and falls across the 5 stages, and where the lowest point falls5-Stage Overview →
- 02Choose a project stageSee which decisions you face now, and the decision framework for that stageStrategy by Stage →
- 03Calculate with real numbersEnter your project's figures into the tools, which run instantly in your browserTools →
- 04Read in depthFull handbooks and articles in the Knowledge Base's 9 categoriesHandbooks and articles →
The Core Question
The lowest point of the cumulative cash flow curve is the funding you actually need to have ready
Project cash typically keeps falling until the construction stage, then recovers when ownership transfers take place. This is when contractor progress payments, interest and taxes all fall due together, while down payments are still arriving in small instalments.
Strong sales alone are therefore not enough. Every article on this site states which stage of the project the topic affects cash in.
02 — Project Lifecycle
The 5 project stages and the key question at each stage
- Stage 1
Land & Feasibility
Should you buy the land, and do the returns justify the risk?
Project IRR and NPV - Stage 2
Funding & Presale
How much funding is needed, from which sources, and how much presales are required before construction can start?
Presale and Peak Equity - Stage 3
Construction
When does cash outflow peak, and will loans and down payments cover the contractor progress payments?
Monthly funding gap - Stage 4
Transfer & Closing
How much cash is needed on transfer day for taxes, fees and debt repayment?
Transfer day costs - Stage 5
Exit & Hold
Sell the remaining inventory or hold it, how to share the profit, and how far actual results differ from the plan
Equity IRR from the debt structure
03 — Financial Tools
Calculate with your own numbers
Frequently used tools that run in your browser, with no registration required
- IRR · NPV
Project IRR and NPV
Enter annual or monthly cash flows to calculate Project IRR, NPV, MOIC and payback
Open the tool → - GAP
Monthly funding gap
Compare the down payments received with the amounts due to the contractor to find the month with the largest funding shortfall
Open the tool → - PEAK
Presale and Peak Equity
Test several sales-speed cases to see the Peak Equity that shareholders must have ready
Open the tool → - DSCR
DSCR and debt sculpting
Calculate the loan amount that cash flow can support at the DSCR the bank requires
Open the tool →
04 — Knowledge Base
Read in depth
Full Handbooks
- IReal Estate Project Strategic Financial Management HandbookContents and summaries of 30 chapters
- IIReal Estate Project Accounting HandbookContents and summaries of 28 chapters
- IIIOwnership Transfer Operations HandbookContents and summaries of 22 chapters
- IVReal Estate Project Law HandbookContents and summaries of 31 chapters
Knowledge Base: 9 categories
- Feasibility & Returns12
- Capital Structure & Banking17
- Construction Cost & Cash Flow8
- Project Accounting & TFRS30
- Real Estate Tax22
- Transfer & Project Law8
- CFO & Business Systems31
- Group Companies & Treasury8
- Hospitality Finance15
The numbers show the number of articles in each category