Gross Realisation Value Loans: How GRV Shapes Development Finance
Gross realisation value estimates the aggregate sale proceeds of the completed project under stated assumptions. It is an important development-finance input, but it is not the same as current market value, net profit or an automatically available loan amount.
Business-purpose and commercial development finance only. Valuation, leverage, presales, costs, drawdowns and terms remain subject to lender criteria and formal approval.
What does gross realisation value mean?
Gross realisation value, commonly shortened to GRV, is the estimated aggregate sale proceeds from the completed lots, dwellings, units or other project components under an assumed orderly sales programme. The valuer states the relevant basis, timing and assumptions.
Some market participants use “GRV loan” to describe development finance sized partly by reference to the project’s completed sale value. It is not a promise that the lender will advance a fixed share of GRV, and GRV alone does not establish feasibility or repayment.
GRV is one boundary—not the whole facility: compare our Property Development Finance Australia matrix covering cost, leverage, equity, presales, location appetite and exit.
GRV, value, cost and debt answer different questions
As-is value
Estimated market value of the property in its present condition and legal state at the valuation date.
On-completion value
Value of the completed asset under stated assumptions, which may differ from aggregate retail sell-down proceeds.
Gross realisation value
Aggregate expected sales from the completed project under an assumed marketing and settlement programme.
Total development cost
Land, construction, consultants, authority, finance, holding, sales, tax and other eligible project costs.
Total debt
Existing and proposed facilities, capitalised or retained interest, costs and other funded amounts.
Net realisation
Gross proceeds after relevant GST, selling, settlement and other deductions, depending on the appraisal basis.
Development debt is usually constrained from several directions
A lender may test proposed debt against GRV or on-completion value, total development cost, as-is value, current land debt, borrower equity, qualifying presales, construction risk, interest cover, net sale proceeds and the repayment exit. The lowest acceptable constraint may determine the practical facility.
Headline leverage does not equal cash available on day one. A facility can include existing lender payout, capitalised or retained interest, establishment, valuation, legal, quantity-surveyor and other costs. Construction advances may then be released progressively rather than paid as unrestricted cash.
Start with the sale schedule, not one headline number
Prepare a schedule for every saleable component: type, area, configuration, proposed price, comparable evidence, anticipated sale date and GST treatment where relevant. Include car parks, storage, commercial space or other components only where the legal title and market evidence support them.
The valuation should address the project’s approval, specification, market segment, supply, buyer depth, selling period, settlement assumptions and any discount for a single-line or bulk sale. A developer’s asking prices or feasibility model do not bind the valuer or lender.
Small changes can materially alter the exit
Sales sensitivity
- lower individual sale prices;
- longer marketing periods;
- buyer defaults or delayed settlements;
- higher incentives or commissions; and
- bulk or residual-stock discounts.
Cost sensitivity
- construction escalation;
- variations and latent conditions;
- authority and consultant costs;
- interest and holding-period movement; and
- additional rectification or compliance work.
Programme sensitivity
- approval or procurement delay;
- construction slippage;
- occupancy or title delay;
- sales settlement timing; and
- facility extension requirements.
Debt sensitivity
- higher current payout;
- capitalised interest growth;
- unfunded costs;
- minimum-interest or extension charges; and
- release-price requirements.
Test both profit and debt repayment. A project may still show accounting profit while producing insufficient cash at the required time to repay the lender.
Contracted sales do not always equal available repayment cash
Presale quality
Contract terms, deposit, purchaser concentration, arm’s-length status, sunset dates and settlement capacity may be assessed.
Release price
The lender may require a specified amount from each settlement before releasing its mortgage over that lot or unit.
Net settlement
GST, adjustments, commissions, incentives, legal costs and other deductions can reduce cash received.
Residual stock
Unsold completed stock may be valued and financed differently from presold stock or the development as a whole.
APRA guidance for authorised deposit-taking institutions discusses prudent policies for qualifying presales and development costs. Private and non-bank lenders may use different criteria, but presale enforceability, concentration and settlement risk remain commercially important.
When GRV-based assessment may be relevant
- land acquisition with an approved or supportable development strategy;
- residential, commercial, industrial or mixed-use construction;
- land subdivision and civil works;
- cost-to-complete or construction completion finance;
- refinance of an existing development facility;
- mezzanine or second-ranking capital within an acceptable capital stack;
- developer exit finance after practical completion; and
- residual-stock finance during the sell-down period.
The lender will still assess the exact stage, approvals, feasibility, borrower experience, delivery team, security, valuation, equity, cost-to-complete, drawdowns and exit.
Documents that support a GRV finance application
- title, ownership, entity and current mortgage information;
- planning approval, permit, endorsed plans and legal title strategy;
- development feasibility with detailed sources and uses;
- quantity-surveyor report and construction or civil contract;
- consultant, authority, marketing, sales and finance cost schedules;
- independent as-is and on-completion valuation with a GRV schedule;
- presale contracts, deposits, purchaser schedule and proposed release prices;
- borrower equity evidence and current project liabilities;
- programme, drawdown schedule and contingency; and
- primary repayment exit with downside case.
How GRV-based development finance may be assessed
Define the project
Confirm ownership, approval, product, programme, delivery team, purpose and funding stage.
Build the sale schedule
Itemise every component, expected price, evidence, timing and relevant deductions.
Verify total costs
Include land, hard and soft costs, finance, holding, sales, taxes and contingency.
Map the capital stack
Reconcile existing debt, borrower equity, senior funding, additional capital and drawdowns.
Test debt and exit
Apply value, cost, presale, release-price, sensitivity and repayment constraints.
Complete due diligence
Credit, valuation, quantity-surveyor, legal and other conditions must be satisfied before funding.
GRV only becomes repayment through completed settlements
The primary exit may be progressive settlement of presold or future-sold stock, refinance of completed investment assets, a single-line sale, residual-stock refinance or another verified source. Model the timing and net cash allocated to debt under the lender’s release-price rules.
Stress-test lower sale prices, delayed settlements, cost overruns, unsold stock and an extended interest period. The contingency should identify the action to take before facility maturity and the security remaining after each release.
Approved townhouse development with staged sell-down
Example only, not a completed client transaction. A developer controls an approved townhouse site and seeks construction finance. The application includes an independent valuation with individual completed values and aggregate GRV, a quantity-surveyor report, fixed-price building contract, equity evidence, presale schedule and detailed feasibility.
A potential lender tests the proposed facility against value, total development cost, equity, presales, construction programme and downside sales. Advances are proposed through verified progress draws, and each settlement must meet an agreed release price. Any actual structure remains subject to lender criteria, valuation, legal and quantity-surveyor due diligence and approval.
Gross realisation value loans
What is gross realisation value?
GRV is the estimated aggregate sale proceeds of the completed project components under stated assumptions and an assumed sales programme.
Is GRV the same as the market value of the whole development?
Not necessarily. Aggregate individual sell-down proceeds can differ from the market value of the development sold in one line, and the valuation basis must be clear.
Does a lender advance a fixed percentage of GRV?
No universal percentage applies. Lenders use their own value, cost, presale, equity, debt, drawdown and exit criteria.
What is the difference between GRV and net realisation?
GRV is gross sale proceeds. Net realisation allows for relevant GST, selling, settlement and other deductions according to the appraisal basis.
Can GRV finance be used without presales?
Potentially with some lenders and projects, but requirements depend on the product, borrower, market, equity, leverage, valuation, construction risk and exit.
Can GRV support residual-stock finance?
Completed unsold stock may support a separate development-exit or residual-stock facility, but it will be assessed at the relevant stage and valuation basis.
Valuation and development-lending guidance
Need development finance assessed against value, cost and exit?
Present the project, approvals, GRV schedule, valuation, total costs, existing debt, equity, presales, required facility and repayment plan for an initial scenario review.