What to take into your next appraisal
- A marketing licence and a sale or lease licence serve different purposes.
- Attach release assumptions to the project account documents.
- Stress release delays independently of contracted demand.
Identify which licence supports the activity
REGA describes distinct off-plan services, including marketing and sale or lease licensing. The marketing service describes conditions on reservation amounts, including a limit of 5% of unit value and deposit in the designated account. That marketing condition is not a general construction funding permission or a substitute for a sale licence.
Record the licence number, project scope, validity and permitted activity. The appraisal should not assume unrestricted sales simply because a marketing campaign can begin. Ask the legal and sales teams to align the model dates with the licence actually issued.
Sources: Real Estate General Authority: Off-Plan Sales and Lease
Build a funding evidence chain
The REGA service describes project documentation, including land records, feasibility information and arrangements for the project escrow account. Map each required document to an owner and programme date. Keep regulatory requirements separate from the lender or account trustee requirements, even where both request a progress certificate.
A usable schedule connects the buyer contract to its collection date and then to the evidence permitting use of those funds. Neither a gross sales total nor an escrow bank balance establishes cash available for general corporate expenses.
Sources: Real Estate General Authority: Off-Plan Sales and Lease
Separate collections from available cash
Consider a fictional SAR project with SAR 4 million of buyer receipts in month one. Assume its documented release programme permits SAR 1 million for works in each of months two and three. Those months each incur SAR 1.6 million of eligible costs, with no other available funds.
| Measure | Planned releases | Releases delayed beyond month three |
|---|---|---|
| Buyer receipts | SAR 4m | SAR 4m |
| Cash released by month three | SAR 2m | SAR 0 |
| Costs paid | SAR 3.2m | SAR 3.2m |
| Equity needed through month three | SAR 1.2m | SAR 3.2m |
| Closing restricted balance | SAR 2m | SAR 4m |
Distinguish sales risk from certification risk
Run one case with late buyers and another with unchanged buyers but a delayed certificate. The first changes receipts; the second changes availability. Combining them is useful as a severe downside, but keeping the drivers separate identifies whether the action belongs to sales, construction or the account trustee.
Do not subtract a release twice when it pays a contractor directly. The escrow ledger should reconcile opening balance plus collections minus disbursements, while the funding ledger records only the remaining cost to be financed.
Report conditions alongside the funding gap
The funding paper should show the licence status, evidence supporting releases, peak restricted cash and peak equity. A profitable project can still require a bridge while documents are reviewed. Give that bridge a source, cost and expiry date.
Reconfirm the project terms before financial close and after material licence, design or financing changes. The example is a modelling framework; it does not establish that an unlicensed project may collect or use buyer money.
Sources and further reading
- Off-Plan Sales and Lease Real Estate General Authority
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