What does as-if-complete value mean?

A valuation made as though the proposed building already existed. The valuer sets aside the state of the site and estimates what the finished project would sell for, usually in current market conditions unless the instruction asks for a projection to the completion date. Under the RICS standard it is a special assumption, and such assumptions have to be stated in the report. A lender uses the figure to see what its loan would be measured against on completion, alongside the value of the site in its present state.

What is the difference between GRV and GDV?

They are two names for the same idea: the total expected sales of the finished project. Gross realisation value is the usual Australian term; gross development value is the UK term, and both appear in New Zealand. Neither has one fixed treatment of tax and selling costs in general use, so a lender checks whether the figure in front of it includes GST or similar, and whether costs of sale have been deducted.

Is on-completion value the same as the sale price?

Not until sales actually happen, and possibly not then. On-completion value is an estimate made before the building exists. The actual prices will depend on the market when the units come to be sold, on how the sale programme runs and on how many buyers settle. Presales are the closest evidence of the eventual price, which is why a valuer and a lender set the estimate beside them and ask why they differ.

Do banks lend on as-if-complete value or on cost?

Usually with reference to both. A facility commonly carries a limit against total cost and a limit against value on completion, and the lower resulting figure sets the maximum loan. A bank may also look at value in one line if it wants to know what it would recover if the units had to be sold together. The levels of each limit differ by lender, market and type of project.

// WORKED EXAMPLETHE ARITHMETIC A DECISION RESTS ON

On-Completion Value: a Worked Example

One unbuilt project can carry three honest values.

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-09 · 6 MIN READ

// THE SHORT ANSWER

When a valuer reports on a site that is still a hole in the ground, the figure a development lender uses to size its loan is a valuation of something that does not yet exist. On-completion value is what the finished project is expected to fetch, and a lender divides its debt by that number to see how exposed it would be if the sales stalled. The first question is which of several similar figures it has received: the sum of individual sale prices or a single sale of the whole block, in today's market or a future one, with or without GST.

BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.

// MAKE THE CALL

Issue 08 — Basalt Ridge Developments. A new-to-bank developer, a claimed 28% ROE and two other banks circling. Your bank has a growth target. Your call first, then the senior banker's.

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PART OF Property Development Finance

// 01 — WHAT THE VALUER IS BEING ASKED

A valuer can be instructed to value a development on several bases at once, and a good instruction asks for each. The site as it stands today answers what the bank could sell if nothing were built. The on-completion figure answers what the finished project is worth. The RICS standard on development property defines gross development value as the aggregate market value of the proposed development on the special assumption that it is complete on the date of valuation, in the market conditions of that date.

That definition exposes a choice. A valuer may report today's market applied to a building that is not there, which is the RICS assumption. A valuer, or a developer's model, may also project the market to the date the building will be finished. The second is a forecast of prices on top of an assumption about the building. A lender reading a report should know which it holds, since a project that is two years away can be two years wrong.

// 02 — THE FIGURES WITH SIMILAR NAMES

Sum of individual sales each unit sold separately, over time

(GRV in Australia, GDV in the UK)

Value in one line the whole project sold to one buyer, once

Net of costs after selling costs and tax on sale

As is the site today, built to its present stage

The gap between the first two lines is real money. A single buyer taking 28 units at once is doing the developer's selling and carrying the holding cost, so it pays less than the sum of retail prices. The figure a lender would actually realise if it took over a finished project with no sales is likely to be closer to the one-line value. Many valuation reports give both, and some lenders test against the lower.

Tax has to be stripped out where it applies. New Zealand and Australian developers may present prices inclusive of GST, while the value available to repay a loan is not. The treatment differs by market, as it does in the feasibility. RICS separates a net development value, after sale costs, from the gross figure, and a lender should know which one its ratio uses.

// 03 — THE EXAMPLE

A developer is building 28 walk-up flats in a university town, constructed for this page like every figure in it. Total cost is US$12.0m and it asks for US$8.4m. The feasibility assumes US$540,000 a flat. Twelve flats are presold at an average of US$475,000, and the valuer adopts that evidence for the rest. A single buyer for the whole block is judged to pay US$11.9m. Figures exclude tax. The lender's limits of 70% of cost and 65% of on-completion value are the example's, not market norms.

Loan to cost: 8.40 ÷ 12.00 = 70.0%

On-completion basis Value (US$m) Loan ÷ value

Feasibility, 28 × 0.540 15.12 55.6%

Valuer, sum of sales, 28 × 0.475 13.30 63.2%

Valuer, in one line 11.90 70.6%

Loan supported at 65%:

On the sum of sales: 13.30 × 65% = 8.645

In one line: 11.90 × 65% = 7.735

Reduction from 8.40 if one line binds = 0.665

The same loan reads as three different risks. On the developer's prices it seems well inside the limit. On the valuer's sum of sales it passes with some room. On a single sale it fails, and if the lender tests that basis, the developer must find a further US$0.665m.

The gap between the first two rows also tells the lender something about the margin. At the feasibility's prices the project earns US$3.12m, or 26.0% on cost, before selling costs. At the presale evidence it earns US$1.30m, or 10.8%. Nothing has been built, and most of the developer's margin has already been reconsidered, because twelve actual contracts carry more weight than twenty-eight hoped-for ones.

// 04 — HOW IT DIFFERS FROM LOAN TO COST

Loan to cost is measured against money going in, and on-completion value against what is expected to come out. Cost can be evidenced by contracts and invoices, and value only by comparison, so the first is firmer and the second more telling. A project can pass on one and fail on the other: a developer who overpaid for land has a high cost and a modest value, so cost looks safe while value does not; a project priced at the top of a rising market can show the opposite.

Facilities commonly set both, with the lower resulting loan binding. UK lenders tend to speak of loan to gross development value, and the concept is the same. Banks in New Zealand and Australia commonly read the LVR on completion next to loan to cost and presale cover. The residual land value calculation takes the same on-completion figure and works back to what the site can bear.

DEFINED IN ONE PARAGRAPH → · LOAN TO COST → · PROPERTY DEVELOPMENT FINANCE →

// 05 — WHERE IT DECIDES A FILE

The instruction sets up the answer. A lender instructs its own valuer, or takes reliance on one through a valuation reliance letter, and specifies the bases it wants. A report commissioned by the developer for sales purposes may assume bases the lender would not choose. The date matters as well: a valuation done at approval can be out of date by the time the building is close to completion, and a lender may ask for an update before the final drawdowns or when presales have stalled.

The presales are the check. Every contract signed is a direct observation of what a buyer will pay, subject to whether the buyer completes. If the valuer's unsold units sit well above the presold ones, the lender asks why the buyers yet to arrive should pay more than those who have already signed. In a falling market the answer is often that they will not.

LOAN TO VALUE, SECURITY AND COLLATERAL → · DEVELOPMENT LOAN, THE PRODUCT →

// SOURCES

The documents the statements on this page rest on. Each was opened and checked when cited.

RICS, Valuation of development property, professional standard, global, 1st edition (October 2019, reissued as a professional standard April 2023) — glossary (gross development value; net development value) and section 2.2 — Defines GDV as aggregate market value on the special assumption of completion at the valuation date, distinguishes NDV after sale costs, and treats a proposed scheme for lending as a matter of special assumption where it is not the optimum — sections 01 and 02.

// QUESTIONS PEOPLE ASK

What does as-if-complete value mean?: A valuation made as though the proposed building already existed. The valuer sets aside the state of the site and estimates what the finished project would sell for, usually in current market conditions unless the instruction asks for a projection to the completion date. Under the RICS standard it is a special assumption, and such assumptions have to be stated in the report. A lender uses the figure to see what its loan would be measured against on completion, alongside the value of the site in its present state.
What is the difference between GRV and GDV?: They are two names for the same idea: the total expected sales of the finished project. Gross realisation value is the usual Australian term; gross development value is the UK term, and both appear in New Zealand. Neither has one fixed treatment of tax and selling costs in general use, so a lender checks whether the figure in front of it includes GST or similar, and whether costs of sale have been deducted.
Is on-completion value the same as the sale price?: Not until sales actually happen, and possibly not then. On-completion value is an estimate made before the building exists. The actual prices will depend on the market when the units come to be sold, on how the sale programme runs and on how many buyers settle. Presales are the closest evidence of the eventual price, which is why a valuer and a lender set the estimate beside them and ask why they differ.
Do banks lend on as-if-complete value or on cost?: Usually with reference to both. A facility commonly carries a limit against total cost and a limit against value on completion, and the lower resulting figure sets the maximum loan. A bank may also look at value in one line if it wants to know what it would recover if the units had to be sold together. The levels of each limit differ by lender, market and type of project.

// NEXT TO IT

// ON WHOSE DESK

The seats that read this term in an ordinary week. Each page says what the seat is for, who arrives in it, and the shape of the round it runs.

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THE NUMBER · THE ECONOMY · COLLATERAL MARKETS

An office building earns US$1.0m a year of net operating income. Buyers price such buildings at a 5% yield, so it is valued at US$20m. The loan against it is US$12m.

If the yield buyers want rises to 6%, what is the loan-to-value?

3 MORE ON THE ECONOMY · COLLATERAL MARKETS →WHERE DO YOU READ FROM? THE PLACEMENT →

THE READING ROOMIN ONE PARAGRAPHOn-completion value What is on-completion value in development lending?