Project financing of the construction of real estate - Safe way to the roof over your head

The model of project financing, construction of housing units provides many advantages to investors, contractors, and future buyers of real estate. Among the advantages of project financing are also set out shorter terms for building, and less of the waiting time for moving in and security that the building will be brought under the roof and will be listed. The company which is building the object is followed by the bank from the start to completion of works. Investors have the money provided for all phases of construction and for all contractors. On the other hand, buyers of dwellings are protected from the risk that the investor will not meet its obligations.

- If a customer wants to buy the apartment through a loan in the facility whose construction is financed by the bank, basic advantages are the easier way to find apartments for shopping, the information on the flats on the offer are obtained in centers of Erste Bank's housing loans, the security that the facility will be built with all the necessary permits, ie that the object and all its parts will be listed, as well as a smaller volume of documents related to the building - as stated by the figures of Erste Bank.

The bank said that the approval procedure of housing loans for purchase of property from project financing was identical as in the cases of purchase of any other dwelling, under the same conditions of loan approval.

- An additional benefit for the purchase of property that is subject to project financing is a possibility that the loan is approved and for real estate whose degree of completion is less than 80%. The possibility of purchasing property in the initial stages of construction, with all the advantages that the model of the construction by project financing carries, is certainly bigger and better selection of real estate and potentially cheaper than the purchase price that could be offered for the finished object.

Erste Bank approved, in the course of the 2009, for construction of house objects of some 23,000 m2, a total of 16 million USD loan, while during the first half of the 2010, it approved a total of about 6 million USD. The bank has been in the previous period mainly focused on the financing of smaller buildings in attractive locations in Belgrade, Novi Sad, Kraljevo and Kragujevac.

The question about investors with whom the bank has so far worked, in Erste Bank said:

We would like to emphasiz the cooperate with the company "Carlton Invest" from Belgrade, with whom during the period of 2007 until 2009, we finalized the project of construction of a residential building with 24 apartments in the street Jove Ilic 67 in Vozdovac, then cooperation with Novi Sad based company "Prezident" and Kraljevo's company "Ogip". The reason for emphasizing cooperation with these investors is the fact that with each of them our cooperation has not only finished on one project, but on mutual satisfaction, we continued cooperation in new projects as well.

Erste Bank is financing the construction of another project from the company "Carlton Invest" - the project "Carlton star". It is a matter of a residential building on the area of 1484.25 m2 in Street Duke Savatija 17 in Belgrade and it will be completed by the end of the year.

In Novi Sad, the company "Prezident", following the cooperation in building of "Prezident" Hotel Street Futoški put 109, entered with Erste Bank the project of building 39 flats in the street Futoska 1 a, which should also be completed by the end of this year.

Erste Bank announces that by 2011 the market will get several new buil objects in Belgrade, Novi Sad, Kragujevac and Kraljevo.

- Due to the large interest of our clients, as a particularly important project we need to mention the project of construction company "Montinvest" in Street Radivoja Koraca 9 in Belgrade, entitled "Moin". The project represents construction of residential and business establishments of higher grade equipment, at a very attractive location, which should be completed no later than April 2011.

(Carlton invest project in Duke Salvati St.)

This model of lending to investors is a secure and stable financing, according Milorad Ivanovic, Director of the company "Carlton Invest"
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- "Carlton Invest" has had a positive experience with project financing of the facilities that were built with the support of Erste Bank and Hypo bank. Processing of requests, monitoring of the execution of construction, payment of contractors and suppliers of equipment by the bills, as well as establishment and removal of a mortgage from the building under construction and building of dwellings, were effective and did not hinder the construction of the building. Of course, a prerequisite for this is a serious, responsible investor, compliance of regulations, project documentation and deadlines - says interlocutorof "ekapija".

Speaking about the advantages of project financing for the buyers of real estate, our source adds:
- Safety provided by the project financing, control of the facility's development by the bank and purpose use of customer funds by depositing the installment of the purchase price to investor's deposit account at the bank that provides project financing, give a positive response among customers. However, a large number of customers does not have experience with project financing and requires additional clarification in terms of gaining security.

Since its inception, "Carlton invest" model of project financing, which their founders adopted as a known method from the more developed financial world, has enabled a smooth and safe construction of buildings and placement at the market.

- Our business is transparent, responsible and conscientious, and it is a good basis for the approval of project financing by the bank. Therefore, we provide timely execution of financial obligations and the trust of contractors and customers.

Project funding is getting more presented in the majority of banks in Serbia. We remind that Avramovski Fink, manager of property development at KBC Bank, recently announced that the plan and strategy of KBC Bank was for now to solely fund residential facilities, at good locations and with structure of housing units available to each customer.

He cited as examples some projects in Belgrade, in Presevo street in Zvezdara with 34 residential units, 25-75 m2, Novi Sad (corner of Boulevard, King Peter and Prince Mark) with 57 residential units of 25-85 m2, as well as project in downtown Indjija, Street Jug Bogdanova, which contains 120 residential units, the surface of 30-80 m2.

- Last year we funded a dozen projects, of which few in Belgrade (Zvezdara, Rakovica, Zemun, Vracar), but in Novi Sad and Uzice as well. Customers are there, they were there in the last year even tough there were announcements that they stopped buying the property. Time can not stop. Just that buyers are now more cautious and choose more those flats that are backed by the bank because they are sure it will be completed in a timely manner. On the other hand the bank can immediately start implementation of housing loans, and Nacional Insurance Corporation of such housing loans provides insurance for such apartments at the start of construction, without waiting the minimum of 80% completion of the facility - notes Avramovski.