Real Estate Corporate Finance - All you need to know

Real Estate Corporate Finance - All you need to know

March 07, 2022 Admin
real estate corporate finance real estate corporate finance in India real estate finance in services

 

Real estate corporate finance is a type of project finance, and to understand the benefits it offers to a company, let’s get to know more about it in detail.

 

What is real estate corporate finance?

Financing a project for long-term is done with an independent capital investment that can be identified with cash flows and assets. Real estate corporate finance is an example of project financing. Some of the examples of project financing are oil & gas, mining etc. Usually, when a corporation/ company plans to invest in a new project, cash flows and assets are used to procure funding in such projects. Along with that, creditworthiness of the company is also relevant to borrow the funds and also while investing in a project. 

 

Why do you need real estate corporate finance?

There are so many misconceptions about Real Estate Corporate Finance in India that you should know about and keep in your mind to make better decisions. The biggest misconception is that it requires huge capital to start with in most of the cases. It is important for you to understand what works for you and what doesn’t. You must take your time and go for the suitable investment option available. 

 

Remember that the smaller market offers great results and is less risky. This broadens the scope to invest in the smaller geographical areas where the ratio of buying value and rent value is high and hence, increases the possibility of investment and renting options.

 

Considering the above points, there is a huge scope of investment in real estate corporate projects, as the results are relatively better. 

Real Estate Corporate Finance - All you need to know

Terms to understand the Real Estate Corporate Finance

The following are the important terms and definitions that you need to understand while working in a corporate finance project:

 

  • Loan to value (LTV): Debt financing amount that a lender provides on the percentage basis of the market value of the property.
  • Loan to cost (LTC): Debt financing amount that a lender provides on the percentage basis of the cost of development.
  • Net operating income (NOI)
  • Cap rate
  • Amortization period
  • Term
  • General partner (GP)
  • Limited partner (LP)
  • Land loan
  • Floor space ratio (FSR)
  • Gross building area (GBA)
  • Gross leasable area (GLA)
  • Gross site area
  • Deductions
  • Net site area
  • Max GBA
  • Construction GBA
  • Saleable area

Benefits of real estate corporate finance

  • Real estate financing is a growing investment option, increasing with a CAGR of around 30%. With this rate, the business is multiplying in every 2.5 years. 
  • RERA and Aadhaar are pushing the limits to make the real estate business in the main-stream, which will be inviting more real estate players into the market.
  • At present, it is the best time to invest in real estate with loan offers offering great profit in return. 
  • Due to the push in demand and supply of affordable housing, housing finance is expected to give the highest growth in the upcoming years, in comparison to services, technology, and trading. 
  • Real estate corporate finance in services has become a dependable segment and it has witnessed substantial growth towards the Grade ‘A’ property standard. Favourable investment growth is also predicted in the ‘co-working space’ lease in particular. 

Conclusion:

From the above discussed points, it can be concluded that the investment option of real estate corporate finance is quite promising in relation to the other examples of real estate financing. Being a few among the Best real estate corporate finance companies in India, Resurgent India is a reliable and sustainable entity that has been delivering optimum results for more than a decade now. To start being a part of this investment option right now is the best time.

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