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Real estate financing has finally become cheaper. Don't rush to check the new interest rates yet because when we say financing, we mean cash flow required for construction is now increasingly being met by revenue from sales of units in the project itself.
As a result, costly construction finance deals are on their way out. Or so it seems, with reports indicating a dip in these deals in recent times and that is good news overall.Positive trends worth noting
✅ Expensive debt deals have halved in residential realty in the last two years.
✅ NBFCs have lower liquidity-linked stress levels now according to experts.
✅ Listed and reputed developers are obtaining loans at attractive rates though some still find financing to be a slight challenge.
✅ With stronger sales volumes, developers are shying away from borrowing money at 18-20% and more. They are more amenable towards offering slight discounts to buyers and clearing off inventory instead.
✅ Many are refinancing existing loans at lower rates of interest.
✅ Quarterly sales figures touched 78,627 units between January and March per this report.
Why it matters
The September 2018 IL&FS default is still being talked about over antacids in the NBFC space. Many stopped lending to developers altogether. In came RERA and economic turbulence, leading to capital getting costlier for quite a few years.
However,
Fingers crossed about bypassing another pandemic, more inflationary troubles and raw material hikes.