Ground Up Development Finance

Costs Involved in Ground-Up Development

Ground-up development comes with a range of expenses that investors need to consider carefully:

• Land Purchase: Acquiring the plot for development.
• Labour Costs: Payments for architects, contractors, electricians, plumbers, and other professionals.
• Materials: The cost of construction materials required for the build.
• Borrowing Costs: Interest and fees associated with financing the project.
• Planning Application Fees: Charges for submitting necessary permits and approvals.

This is not an exhaustive list, but it highlights the most common expenses associated with ground-up development. Actual costs can vary significantly depending on the specifics of each project.

Key Considerations When Financing Ground-Up Development

Before securing development finance, there are several factors to keep in mind. Lenders typically require specific documentation, though the exact requirements can vary. Commonly requested documents include:

• Proof of Experience: Demonstrating your track record with similar projects.
• Planning Permission: Evidence that the necessary approvals are in place.
• Land Valuation and Projected Value: The value of the land at purchase and the expected value of the completed project.
• Construction Costs: Detailed documentation of the estimated expenses for the build.
• Schedule of Works: A breakdown of who will carry out the work, timelines, and associated costs.

Additionally, you'll need to outline your exit strategy, explaining how you plan to repay the development finance. If transitioning to long-term financing, lenders may require proof of the product you'll use for repayment.

This list is not exhaustive, and lender requirements may differ based on their policies and your project specifics.