Financing scheme for the project
Financing in real estate is usually associated with significant monetary expenditures because such financing is mainly carried out by means of attracting third party investments. The later may be provided in various forms:
- equity financing (financing through co-investors attracted to participate in the investment project);
- credit financing (financing through credit funds from banks and other financial institutions).
All these forms are commonly used in practice, but these methods also can be combined. The necessity to have certain own capital results into the attraction of large foreign companies for the purpose of financing requirements of banks being met.
For the purpose of more favourable tax and management position regarding investment object operating, a foreign investor can establish a Russian subsidiary company. A subsidiary reduces commercial risks of the holding company, and helps for the efficient structure of possession of assets.
While evaluating the requirements of project financing a complex of factors connected with the realities of Russian real estate market should be analyzed, because it may have a great influence on the implementation process of the project. They are:
- terms and costs of changing the functional designation of a land plot, as well as connecting the constructed object to engineering networks;
- necessity to optimize the structure of the ownership rights in the case when a complicated structure of owners results into difficult obtaining of project financing;
- securing financing.
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