Project finance capability of homebuilding in the Republic of Serbia

Abstract

Project finance is characterised by a range of specific features in comparison with standard financing sources such as corporative or credit financing. In most cases, the difference arises from the characteristics of the borrower and way of generating cash for loan repayment. Accordingly, if the project has passed the elimination criteria, that is, golden rules of project finance, it can be regarded as potentially suitable for financing. The application of project finance in the Republic of Serbia is a consequence of experience and expertise of leading foreign banks, due to a need for further expansion on the market, but also in changes that happened in the banking sectors by implementation of Basel regulations. The paper aims to point to the general principles of project finance on an example from business practice and to analyse capability of financing in the area of residential construction, appreciating the fact that significant diversifications of project finance in the Republic of Serbia can be expected in the forthcoming period.