Pre-sales are signed contracts of sale on lots, units or houses in a development project, exchanged before construction is finished. The buyer pays a deposit at exchange (typically 10 percent) and settles on completion, when the asset is registered and ready to transfer.
For a developer, pre-sales matter for two reasons. First, they de-risk the project by locking in known buyers at known prices, which materially reduces the marketing risk after completion. Second, they are central to credit appetite. Most bank construction facilities require a minimum pre-sale coverage ratio (debt covered by pre-sale contract value) before they will fund construction at all.
For private credit on land or DA-hold files, pre-sales are evaluated for quality, not just volume. Contracts with material deposits from qualified buyers in robust markets count materially more than soft contracts with refundable deposits from speculative buyers. The credit team underwrites pre-sale strength as part of the exit assessment on every development file.