Equity Tips, Are investors a market necessity?

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In a cash-starved business like real estate, almost all the developers have their own set of lenders, investors, quasi-equity partners and even informal crowdfunding mechanisms. The extent to which these intermediaries solve the sector’s funding woes remains debatable. Concerns have also been raised over whether these intermediaries get a free run, to make money and be a catalyst for unaffordable housing stocks across the Indian cities. 

Pros and cons While developers may not admit to this market reality, some of them agree that it is a financial compulsion, to carry on business with investors as anchors for their projects. Although it may be quite challenging to live with investors as quasi-equity partners, there is no denying that developers, in the present eco-system, need investors. Industry experts maintain that one also needs to look at the root causes that facilitate investors’ entry into the business and their subsequent success.