"Alternative financing is no longer a last resort or an afterthought for the developer".
The numbers are clear. And with traditional banking keeping the 'handbrake on', the question is which players will replace this bank financing. The answer seems obvious: the role of alternative financing is going to be important in the coming years, much more than it is today, accounting for just under 20% of the market.
It is a fact that banks are withdrawing a large part of the financing they used to provide, due to the capital requirements set by the European Central Bank and the Bank of Spain. It now costs them more money to finance. It is also a consequence of bank concentration in Spain after the 2010 crisis. We have gone from 50 to three mega-banks and two or three medium-sized banks, so access to bank financing is less than it was before.
This is where alternative financing emerges, to meet the capital needs of businesses, largely real estate developers. In the case of DEXTERIf the developments are commercially viable, strong, no reserves or pre-sales are required in the case of residential: the investment funds come in from minute zero, with the land bought and paid for by the entrepreneur, and undertake the entire construction.
Industry players understand that for developer lending, with a need estimated at 10 billion euros, 3 billion euros in alternative financing are expected by 2023. Santander, BBVA and CaixaBank have already cut 2,000 million euros in developer lending. That says it all.
The Commercial Director of DEXTERGuillermo Díaz points out that "We are already noticing a paradigm shift. Alternative financing is not a last resort or a last-minute resource for the developer. He contemplates it from the beginning, especially for the start-up and a good part of the development of the construction, for the first certifications. This gives viability and makes his business possible, which would otherwise remain paralysed".concludes the company's executive.
