Development Finance in a Shifting Market

Australia’s housing sector is undergoing a significant transformation, with developers navigating evolving policy, supply constraints and regulatory complexity. 

In a recent conversation with Davide Bini, General Manager of Development Finance, we gained candid insights into the market forces shaping development finance for the residential sector.

Davide also shared how Assetline is actively supporting brokers and developers to succeed in today’s environment.

Meeting Demand Amidst the Housing Crisis

Australia’s housing crisis is driving unprecedented demand for new dwellings. But this opportunity is tempered by systemic challenges, including: planning changes and delays, rising construction costs and labour shortages.

Bini points to two core trends shaping residential development activity:

1. A Well-Publicised Undersupply of Dwellings
   Across Australia, both state and federal governments have committed to boosting residential supply, but developers are facing significant headwinds. In jurisdictions like NSW and Victoria, drawn-out planning regimes and tighter compliance for Class 2 buildings are pushing many developers to pivot to smaller Class 1 projects (duplexes and townhouses with simpler compliance pathways).
   
   

2. Planning Reforms and Incentives
   Reforms such as the NSW government's push to increase density near retail precincts and transport hubs have opened up new opportunities, particularly where Floor Space Ratio (FSR) and height limits have recently been relaxed. Whilst positive, these shifts require developers to act quickly to rework feasibility and align with market appetite.

Navigating State-by-State Challenges

Assetline’s development finance team actively tracks regional variations in construction and planning policy:

• NSW & VIC: Developers are increasingly moving away from complex multi-unit residential builds due to compliance burdens and prolonged planning timeframes.

• QLD: While planning is faster and more cost-effective in southeast Queensland, labour shortages, exacerbated by infrastructure spending ahead of the 2032 Olympics, have pushed up construction costs over recent times and for the foreseeable future.

Across the board, developers are grappling with rising build costs and tighter feasibility margins. As Bini explains, “Projects that looked viable two years ago now struggle to stack up due to escalating input costs and reduced returns.”

Assetline’s Active Approach to Development Finance

At Assetline Capital, we consider ourselves a responsive, commercially-minded development partner. Our lending process is built around speed, expertise, flexibility and commerciality.

From scenario to settlement, Assetline applies an “active lending” model that includes:

• Indicative term sheets issued within 24 hours

• Full credit approval typically within 48 hours of receiving full suite of information including valuation and QS reports

• Ongoing site inspections and drawdown management by an in-house construction team

• Flexible drawdown schedules, including multiple or out-of-cycle drawdowns

This hands-on approach gives developers certainty and support throughout the lifecycle of a project, particularly when unexpected variations or contractor issues arise.

As Bini notes, “We don’t just release funds, we partner with developers to manage compliance, monitor site progress and offer guidance where needed.”

We assist developers throughout the build process in ways many others wouldn’t. 

Real Impact: A Case Study in Risk Mitigation

One standout example of Assetline’s impact involved a project in Melbourne where a builder issued several variation claims amounting to nearly 30% of the construction contract. The developer, without consulting Assetline, had agreed to the variations.

Assetline’s construction team intervened, reviewed the claims alongside a quantity surveyor, and discovered the builder had not incurred the additional costs claimed. Their diligence saved the developer approximately $200,000.

“It’s that kind of close oversight and commerciality that sets us apart,” Bini explains. “We're not just a funder, we’re a development partner.”

Flexible Structuring for Real-World Scenarios

Assetline lends up to $40 million for development projects, with flexibility to go higher alongside co-lenders. Projects span residential, retail, industrial, land subdivision and even specialised assets like childcare or boarding houses.

However, Bini is clear that Assetline won’t pursue deals with weak exit strategies or unfeasible assumptions.

“We assess exit risk upfront. If a borrower can’t demonstrate how they’ll refinance or sell, or if their cashflow model doesn’t hold, we’re not afraid to say no,” he says.

Likewise, Assetline takes a measured approach to high or gearing levels, using relationship history and project quality to calibrate LVRs and risk appetite accordingly.

Mitigating Risk: Delays, Costs and Regulation

Assetline’s in-house construction managers play a critical role in managing risk for Assetline and the sponsors. Their involvement from the outset ensures:

• Realistic build timeframes, verified by QS reports. Our in-house expertise means we have the confidence to challenge a QD assumptions.

• Builder due diligence and compliance (including iCIRT qualifications)

• Identification of critical path delays and cost escalation risks along the way.

Bini notes that risks such as supply delays or non-compliant safety measures are routinely flagged and resolved thanks to Assetline’s monthly site visits and builder relationships.

Final Word: Responsive, Commercial, Partner-Led

As development conditions remain volatile, Bini believes the real differentiator is Assetline’s responsiveness and deep engagement with both developers and brokers.

“Commerciality and speed matter, but so does partnership. We see every project as a collaboration, not just a transaction.”

Learn more about Assetline’s development finance: https://assetline.com.au/products/construction-development 

Contact us to submit a scenario: https://assetline.com.au/contact