Five Critical Questions Every Developer Should Ask Before Choosing a Lender

The head of a property development finance lender has said conditions for developers are close to as tough as he’s seen during his quarter-century in lending, which will make it almost impossible for the federal government to achieve its five-year housing target. Mark Greenberg, the founder of non-bank lender Lambert Capital, said it’s very hard for developers to remain profitable in the current market unless they do their own building work or control multiple steps of the supply chain. “The problem is that developers’ profit margins are extremely tight right now, because building costs and land acquisition costs have increased significantly since the pandemic. To make matters worse, developers’ projects have been taking longer to get approved, built and titled, which has led to an increase in their holding costs and a further reduction in their profits,” he said. “If you want to make enough of a profit and generate working capital to keep trading, you now need to be able to tick three boxes – your builds need to be of good quality, they need to have a reasonable price tag and they need to be delivered quickly. In the past, you could get away with two out of three, but no longer. Otherwise, your holding costs will kill you or buyers won’t be interested in your product or both. “These conditions are close to the toughest I’ve seen during the 25 or so years I’ve been lending, and they’re driving a lot of mum-and-dad developers out of the game. It’s now close to impossible to be, say, a dentist during the week and a property developer on the weekend, because you won’t have the scale or experience to build fast enough and cheap enough.”

As seen in the Development Ready Property Development Review; Capital Flow Strengthening into FY26 Capital inflows for lending and equity investment into Australian development projects are up on last year. Overseas-based lenders and investors, armed with relatively cheaper capital, are targeting Australia’s stability and consistent returns. Locally, high-net-worth individuals and family offices - many of whom have been sitting on cash - are now seeking higher-yielding opportunities outside the share market. Finding such opportunities is increasingly difficult, which is why pooled funds like the Lambert Capital Property Credit Fund are gaining traction. These allow for selective, “cherry-picked” investments that balance risk and return. Combined with RBA cash rate cuts, this influx of capital should lower lending rates, improve project feasibilities, and make it easier for end purchasers to service debt. Non-Bank Lenders Taking the Lead The most active players in the development lending space are non-bank lenders, including specialist credit funds and family offices. Developers are gravitating to these sources for faster, more flexible funding - particularly on projects with presale hurdles, unconventional structures, or those requiring relationship-driven banking. While some newcomers believe the sector offers easy wins, the reality is far more complex. Lambert Capital’s 16 years of experience reveal a market that demands deep expertise to navigate builder insolvencies, developer stress, fluctuating presale conditions, and unpredictable government interventions. Recent exits by debt funds selling their businesses at high multiples may tempt newcomers to chase potential “ windfall ” returns, but sustained profitability comes from resilience over cycles, not opportunistic timing . Asset Classes in Demand Affordable and social housing, NDIS developments, and childcare centres are drawing the strongest funding appetite, supported by demographic trends and government policy. Non-bank lenders are increasing their share of these markets, while larger institutional funds are directing capital toward build-to-rent projects - whether as a strategic pivot or simply to deploy surplus cash. For Lambert Capital, the focus remains on projects with clear exit strategies and trusted developers, including residential land subdivisions, townhouses, low-rise apartments, and warehouses targeting owner-occupiers and investors. Location Priorities for FY26 Funding partners are prioritising house-and-land developments and owner-occupier product in capital cities and high-growth lifestyle regions in NSW and QLD. Demand from both locals and investors remains strong, and Lambert Capital has successfully delivered multiple subdivisions in these markets. Victoria’s market is generally slower, but targeted locations - especially Melbourne’s western suburbs - are performing well. Here, demand for residential land, completed housing stock, and new warehouse space is robust. Ultimately, Lambert Capital’s strategy hinges as much on the developer’s track record as on the project’s postcode. From Tight Credit to Renewed Confidence Between 2020 and late 2023, tighter credit conditions and escalating construction costs squeezed developer returns and curtailed lender appetite. Many projects stalled amid shrinking margins and reduced loan-to-cost ratios. By 2024, construction cost inflation began to stabilise and interest rates started to decline. Entering 2025, improving affordability and sustained demand - driven by population growth - have lifted confidence. More projects now pass viability tests, encouraging developers to restart previously shelved townhouse and land release projects. FY26 funding models are benefiting from this recalibration, enabling lenders to back more profitable developments.