What are the risks in financing a real estate project?

Real Estate lending is one of the contentious issue after the subprime crisis. The sector has witnessed huge inventory across the globe due slowing of the world economy. The problem got exacerbated after the EURO crisis. Under this circumstances it will be difficult for the real estate firms to generate enough cash flow to service the loan. This has resulted in cost as well as time overruns for many projects and subsequently put pressure on cash flow and bottomlines. I hope this answers your question.

Real estate has been a sensative lending stream after the subprime mortgages debactle in2008.

learning from that it is sfe to assume that the foremost consideration should be the repayment capacity of the borrower.

furthermore real estate lending for mega projects is based on the long term demand for the project i.e commercial or residential.