Own means many developers are only sufficient for the construction of the basement

18.09.2012 00:45
Forms and sources of housing finance may be different, but in Western countries, they boil down to three main areas. First, housing is financed by own funds of construction companies. Second, funding is via the construction of commercial lending institutions. And third, is widely used mortgage loans to private developers and buyers of finished housing, both in the primary and secondary market. Moreover, the total financial resources of housing is greatly extended by the wide circulation of mortgage securities.

The basic and fundamental source of housing finance in the world are the own funds of construction companies. In Ukraine, the situation is quite different. One of the features of the construction industry - a significant cost of constructed facilities - limits the ability of construction companies to use its own capital, the growth of which is mainly due to receive net profit. The advantages of using equity in construction are obvious: the resources are free, do not require the return and give full freedom to them. However, experience shows that equity is only sufficient for the construction of the basement at home. For significant growth capital construction companies will take years, maybe decades.

Related article: Expensive loans hold payback projects

As a result, in permanent deficit of working capital is becoming increasingly important alternative sources of financial resources, which are mainly borrowed and borrowed funds. For ease of understanding, external finance, in our view, should be divided into three types:

- Funds raised from investors - legal entities;

- Funds raised from equity participants (individuals or entities);

- Loans of financial institutions.

Most acceptable to both sides scheme - is to raise funds through public funds financing the construction.
Artem sharp-horned head of the legal department, Cascade, IDK
Content tags: Development
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