Why Banks Need a Larger Play in Commercial Real Estate Lending



Why Banks Need a Larger Play in Commercial Real Estate Lending :

India can follow a similar path to what is being done in the US and create more opportunities in the real estate segment of the country.

Lessons from the US economy show that when it comes US banks, they have experienced some of the lowest loss rates of the past six years on loans with regards to commercial real estate and construction segments and this has catapulted their case for increased lending activity in the sector. Similar analogy can be made for the India’s real estate sector.

Analysts close to the real estate segment opine that in addition to falling loss rates, the improving economy and increased competition for attractive borrowers in the commercial and industrial lending space may also contribute to a sense of confidence in lending activity in this sector.

And as a direct result of this, more banks could show their confidence in real estate segment and move closer to the real estate lending process, opening up more options for the borrowers in this space. Similar connotations can be followed in the Indian real estate space as well.

It is important to note that for many years, banks continued to move away from commercial real estate lending because of losses tied to real estate loans, however, things have changed for good and now banks are much more open to lending in the commercial real estate segment than ever before. Similarly in India, a move like this could catapult the demand generation for quality real estate and create many more opportunities for the end customers.


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