Chirayuthchai TraisaengsatheanStrategic Finance for Property Development
THEN

Stage 02 / 05 · Capital Raising & Presale

Stage 2 Funding & Presale

Structuring capital, launching sales, designing payment terms, and the conditions to meet before issuing the notice to proceed (NTP)

Key questionsDo we have enough funding and buyers to start construction?

Checklists and strategic questions5-Stage Overview

Duration
6–12 monthsOverlaps with Stage 1, around months 8–18
Decision gate
Funding Close
Presale Launch
Notice to Proceed (NTP)

Focus Areas

Key points of Stage 2

  1. 01Capital structureProportions of equity, senior debt and mezzanine, with loan drawdown conditionsGo to section →
  2. 02Sales launchPricing, unit mix, Thai and foreign sales mix, and sales preparationGo to section →
  3. 03Designing payment termsBooking deposit, contract deposit and down payment aligned with the project's cash outflowsGo to section →
  4. 04Conditions before issuing the NTPFunding close, Presale volume and the construction contract before the notice to proceed is issuedGo to section →

Executive Summary

Executive summary

  • This stage answers whether the funding and the buyers are sufficient to start construction. The goal is to issue the notice to proceed (NTP) with funding secured up to Peak Funding.
  • Customer payment terms are a financing tool, not just a sales matter.
  • Booking deposits and down payments are not yet revenue. Record them as contract liabilities until transfer.

Key Metrics

Metrics to watch

  • Presale before construction starts30–50%50–70% is considered safe
  • Loan-to-Cost≤ 65–75%depending on the bank
  • Presale Cash Coverage≥ 30%of remaining construction cost
  • Cancellation Rate< 10%
  • Marketing cost3–5%of project value
  • Commission3–7%of sales

Figures are drawn from the website content; use figures from your own model and the funding terms of the actual project.

01 · Key DecisionsDecisions to make

  • Capital structure The proportions of equity, project loans, bonds, JV and mezzanine that cover Peak Funding, with a buffer
  • Pricing and unit mix The launch price, the price increase plan and the proportion of units to sell first
  • Payment terms The booking deposit, contract deposit, down payment and transfer instalments directly determine Peak Equity
  • Thai and foreign sales mix Measured against the 49% quota and each buyer group's ability to complete transfer
  • Form of construction contract Lump sum or GMP, the scope of risk the contractor bears, and retention
  • When to start construction All conditions must be met; it is not enough that the marketing schedule says it is time

02 · Finance · Tax · LegalFinance, tax and legal tasks

Finance

  • Close the final feasibility from the BOQ and the monthly model, then take it to the investment committee
  • Prepare the term sheet and fundraising documents, including conditions precedent (CP)
  • Plan drawdowns by S-curve and set the interest during construction (IDC) policy
  • Compare terms from several funding sources, including interest, tenor, covenants and fees

Accounting and tax

  • Booking deposits and down payments are contract liabilities; revenue is not yet recognised under TFRS 15
  • Borrowing costs related to development are capitalised under TAS 23 during construction
  • Sales commission: set a policy on how to recognise it under TFRS 15
  • Sales of condominium units are subject to Specific Business Tax (SBT), not VAT, but furniture or goods sold separately may attract 7% VAT, so separate the prices clearly in the contract

Law

  • Use the statutory form of sale and purchase agreement (SPA) for condominium units, and check advertising content against the rules of the Office of the Consumer Protection Board (OCPB)
  • Choose whether to hold down payments through escrow or a down payment account, in line with the roadmap. Escrow is an option for protecting buyers
  • Open the foreign quota register from the first day of sales, and keep evidence of overseas fund remittances for use at transfer
  • Sign the construction contract, performance bond and CAR insurance before the NTP

03 · RoadmapRoadmap tasks

P4 Funding

#TaskCategoryResponsible partyOutcomeTime
4.1Finalise feasibility summaryInvestment budgetFinance/FAFinal feasibility & funding requirement2–4 weeks
4.2◆ Investment committee/board approvalInvestment budgetBoardInvestment & budget approvalGate
4.3Funding structure (equity/bonds/JV)FinanceFinance teamTerm sheet for the selected instruments4–8 weeks
4.4Fundraising documents (legal/trustee/offering)LawLawyer/financeSubscription/bond/JV documents, trustee, disclosure6–12 weeks
4.5◆ Funding close (funds available)FinanceFinance teamDrawdown possible / instruments effectiveGate
4.6Conditions precedent (CP) all satisfiedLegal/financeLawyer/financeClear the CP checklistAt closing
4.7Drawdown plan & interest capitalisation (IDC)Investment budgetFinance teamDrawdown by S-curve, IDC policyAt closing
4.8Insurance & security frameworkLegal/financeFinance/lawyerAgree insurance & security strategyAt closing

P5 Sales preparation

#TaskCategoryResponsible partyOutcomeTime
5.1Pricing strategy & unit mixInvestment budgetSales/FinanceApproved selling prices & unit mix3–4 weeks
5.2Design payment termsFinanceFinance/SalesDown payment & instalment schedule ⚠ affects Peak Equity / cash flow2–3 weeks
5.3Draft sale and purchase agreement (SPA)LawLawyerSPA + booking form compliant with the law3–4 weeks
5.4Set up escrow / down payment custody systemLegal/financeLawyer/financeEscrow agreement or down payment account2–3 weeks
5.8Appoint sales agents / sales channelsTechnicalSales departmentAgent agreements, commission terms2–4 weeks
5.9Approve advertising in line with the lawLawSales/LawyerCompliant advertising materials ⚠ rules on real estate advertising content1–2 weeks
5.10◆ Presale launchTechnicalSales departmentPublic launch, open bookingsGate

P6 Pre-construction

#TaskCategoryResponsible partyOutcomeTime
6.1Prequalify contractorsTechnicalPM/QSShortlist of prequalified contractors3–6 weeks
6.2Tender the main works (BOQ)Investment budgetQS/PMIssue tender documents, receive & compare bids6–10 weeks
6.3◆ Evaluate contractors & sign contractLegal/CAPEXOwner/PMConstruction contract, performance bond, retentionGate
6.4Early procurement (MEP/lifts/FF&E)TechnicalProcurementPOs for long-lead itemsOngoing
6.5Construction all risks insurance (CAR) & securityLegal/financeFinance/lawyerCAR, liability, performance/advance bond2–4 weeks
6.7Master programme & construction methodTechnicalPM/ContractorMaster programme, S-curve, construction method2–3 weeks
6.8◆ Issue notice to proceed (NTP)LawOwner/PMSigned NTP – construction startsGate

Sales gallery, show unit and site preparation works are excluded from the table; include their budget in the Marketing and Pre-Construction budget

04 · MetricsMetrics to watch

FigureReference level from the source documentNotes
Presale before construction starts30–50% according to bank criteriaBelow 30%, consider a relaunch or re-price; 50–70% is considered safe
LTCNo more than 65–75%Varies by bank
Project loan to construction cost60–70%The remainder comes from Presale and equity
Pre-transfer receipts to revenueExample: 24%See the effect on Peak Funding on the overview page
Cancellation RateAbove 10% problems beginMonitor monthly by buyer group
Marketing cost3–5% of project valueSales commission is a further 3–7% of sales
Presale Cash Coverage30% or morePresale cash / remaining construction cost
Stage 2 reference levels on one scaleFigures from the table above
Stage 2 reference levels on one scalePresale below 30% calls for a re-price or re-launch, 30–50% is the bank threshold and 50–70% is considered safe; presale cash coverage should be 30% or more; a cancellation rate above 10% signals trouble; LTC no more than 65–75%.Presale before construction% of units / salesRe-price / re-launchBank thresholdSafeRe-price / re-launchBank thresholdSafe0%30%50%70%100%Presale cash coveragePresale cash / remaining build costBelow threshold30% or moreBelow threshold30% or more0%30%100%Cancellation rate% of bookingsBelow 10%Above 10%: a problemBelow 10%Above 10%: a problem0%10%20%Loan-to-costVaries by bankWithin the capWithin the cap0%65%75%100%Cap 65–75%
  • Needs action
  • Threshold / cap
  • Target zone

Equity to prepare = Peak Funding - loan drawable at the Peak point + risk buffer

The model already uses pre-transfer receipts to reduce the peak, so this formula does not double count

Equity to prepare at the Peak Funding pointConceptual view of the formula above
Equity to prepare at the Peak Funding pointPeak Funding, after pre-transfer receipts, is covered by the loan drawable at the peak plus equity for the remainder; adding a risk buffer gives the equity to prepare.Funding needPeak Funding (after pre-transfer receipts)SourcesLoan drawable at the peakEquityRisk bufferRisk bufferEquity to prepare = Peak − loan + bufferBookings and down payments already lower the peak in the model, so they are not counted again as a source

05 · Decision GateDecision gate

Conditions to meet before issuing the NTPAll must be met; missing any one = No-Go or postpone
Conditions to meet before issuing the NTPSix conditions must all be met before the NTP: EIA and permit, investment committee approval, funding close with CPs met, presale threshold, construction contract within budget with bond and CAR, and Peak Funding covered with a buffer.EIA and building permit in hand✓EIA and building permit in handInvestment committee approves budget and funding plan✓Investment committee approves budget and funding planFunding closed and all CPs met✓Funding closed and all CPs metPresale meets the funder's threshold✓Presale meets the funder's thresholdConstruction contract within budget, with bond and CAR✓Construction contract within budget, with bond and CARPeak Funding covered, with a buffer✓Peak Funding covered, with a buffer◆ Notice to Proceed(NTP)Start construction → Stage 3Any condition missingNo-Go or postpone

Go: issue the NTP

  • EIA and building permit complete
  • Investment committee has approved the budget and funding plan
  • Funding closed and CPs satisfied
  • Presale has reached the funder's threshold
  • Construction contract signed within budget, with bond and CAR
  • Peak Funding covered, with a buffer

No-Go or postpone

  • Tender price exceeds budget and VE cannot yet close the gap
  • Presale is below the threshold; must re-price or relaunch
  • Funding source is not yet ready to draw, even though the term sheet has been signed
  • In the stress case, cash goes negative before transfer day

06 · Common PitfallsCommon pitfalls

  • Launching sales before EIA approval risks refunds and loss of credibility
  • Cutting the down payment to speed up sales without recalculating Peak Funding
  • Counting bookings as firm sales without deducting expected cancellations
  • Treating a term sheet as available cash while CPs are still incomplete
  • Recording down payments as revenue
  • Selling units beyond the foreign quota, or not keeping evidence of fund remittances
  • Selling all the best units in the first round at the launch price, leaving the hard-to-sell units for when cash is needed most

Sources

  1. Development Breakdown & Roadmap: Condominium-for-Sale (generic template)
  2. Real Estate Project Strategic Financial Management Handbook: A Practical Guide
  3. Strategic Finance Handbook, Chapter 1
  4. Thailand property rules for foreigners in 2026

Compiled by Chirayuthchai Traisaengsathean
Last reviewed 9 Nov 2026

This article provides general information for educational purposes and is not advice on investment, legal, accounting or tax matters for any specific case. Check the current laws and standards before applying it.

Gate Readiness

Checklists and strategic questions before the gate

See all 5 stages on the Strategy page →

Pre-gate checklist Gate Readiness

0 / 10

Ticks are stored in this browser only and are shared with the strategy pages.

Key questions Strategic Questions

  1. Has Presale reached the funders' threshold? If it is below 30%, consider re-pricing or relaunching.
  2. How much equity must be prepared (Peak Funding − loan available for drawdown at the peak + contingency), and who will provide it?
  3. If the funding source still cannot be drawn even after the term sheet is signed, how many more months can we keep operating on our own cash?
  4. Which payment terms reduce Peak Equity the most without raising the cancellation rate?
  5. How much cost risk does the construction contract transfer to the contractor, and who bears the rest?
  6. In the Stress Case, does project cash turn negative before transfer day?
Related parts of the handbook

Strategic Finance

Project Accounting

Real Estate Project Law

Ownership Transfer Operations