Alternative finance continues to grow and shrink traditional banks
The real estate sector is very intensive in terms of the need for financing. Developers, builders and entrepreneurs who work in it constantly demand capital to supplement the own resources with which they face their projects, whether in the residential, hotel, commercial, office, etc. fields.
The fact is that traditional banking has reduced its contribution to the sector in recent years, going from 2018 with almost 20,000 million of investment to this year, where provisions barely reach half. It is in this scenario that alternative financing with private capital is entering with increasing strength and is proving to be an essential player. And the upward ramp is expected to continue in the coming months and years.
DEXTER has been observing over the last five years that the clear trend is to complement bank financing with private financing, the latter being mainly framed in the start-up phases of projects, prior to their consolidation. The company's Senior Risk Analyst, Rubén Miñarro, points out that "whether they are BTR (build to rent) or conventional BTS (housing to sell) projects, entrepreneurs come with a business plan and a financial structure that is better and better worked out, more and more well prepared. And they contemplate these two phases: a first phase in which, especially in residential, we enter very quickly, and then, once the first year has passed, we replace it with a longer-term bank loan," concludes Miñarro.
Alternative financing continues to grow and shrink traditional banks
The real estate sector is very intensive in the need for financing. Developers, builders and entrepreneurs who work in it constantly demand capital to complement the own resources with which they face their projects, whether in the residential, hotel, commercial or office sectors...
The true fact is that traditional banking has lowered its contribution in the sector in recent years, going from 2018 with almost 20,000 million of investment to this year, where provisions barely reach half. It is there, in that scenario where alternative financing with private equity is entering with increasing strength and is proving to be an essential player. And the upward ramp is expected to continue in the coming months and years.
DEXTER has been observing over the last five years that the clear trend is to complement bank financing with private financing, the latter being mainly framed in the start-up phases of projects, prior to their consolidation. The company's Senior Risk Analyst, Rubén Miñarro, points out that "whether they are BTR (build to rent) or conventional BTS (housing to sell) projects, entrepreneurs come each day with a business plan and a financial structure that is better and better worked out, more and more well put together. And they contemplate these two phases: a first one in which, especially in residential, we enter very quickly, and then, once the first year has passed, the substitution for longer-term bank credit," Miñarro concludes.
