RERA - Impact on Fund Raising

15 March 2018

Fundraising was difficult and dicey in the pre-RERA era, however, after its implementation, the real estate industry has experienced more clarity and transparency in transactions. For one, it is believed that only well-capitalised players will survive in the long-run.

1. Doing away with the pre-launch:

Raising money from pre-launches has become redundant. Earlier, developers raised money from the public by privately marketing properties in projects that did not have all their approvals in place, through informal investors and broker channels. Post-RERA, this has become an unacceptable practise. This ensures that developers opt for more consumer-friendly find raising channels.

2. Financers ask for clear cost estimates:

A developer must draw up an estimate of his overall costs before applying for a fund. He must include soft costs incurred during initial stages of development. Some of these costs include the cost of fees for obtaining permits, engineering costs and infrastructure and construction costs. The idea is to set a realistic budget to complete the project.

3. Equity-based real estate financing:

If the developer decides on real estate project financing through equity, he has 3 options - private equity through real estate venture capital or private equity fund, or public equity. Lenders are creating structured financial products, especially in debt structuring or mezzanine financing, to protect their interests. This leads to an increase in monetary burden on the developer but ultimately results in higher levels of transparency and structure.

Real estate fund raising has never been easy. Post-RERA the only factor that’s changed is transparency.

However, there’s no reason to worry when you have assistance form Dravya Financial Solutions – a premier Financial Services firm specialising in Fundraising, Debt Syndication and Financial Advisory. We help facilitate funds that would otherwise be difficult to mobilise. To know more about this Real Estate Fund Raising firm in Mumbai( India) please visit : http://www.dravyafinancial.com/

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