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Srečko Judar answers questions about financing

The Slovenian market offers many investment opportunities and provides comprehensive support to foreign investors.

 

If you want to know more about investment opportunities in Slovenia, we suggest that you familiarize yourself with the interview with a Century 21 loan specialist.

 

1. What indicators of the Slovenian economy show interest in investing?

 

Many statistics indicate investment dynamics and the interest of foreigners in investing in Slovenia. I would like to note the following:

 

- According to forecasts by UMAD (office of the Republic of Slovenia for macroeconomic analysis and growth), economic growth this year in Slovenia will be 4.4%, in 2018 - 3.9%.

- In October 2017, there was a beginning of the largest investments since the independence of Slovenia. “Koncern Magna” in the vicinity of Maribor has begun construction of the plant, which in the first phase represents an investment of 160 million euros. In the second phase - of 450 million euros and in phase 3 - a total of 1 billion euros.

- Investment of the Japanese robot manufacturer Yaskawa in a factory in Kočevje with the start of construction in November 2017.

- A big recovery in the real estate market. Secondary housing prices on average increased by 8% last year, from the lowest point at the beginning of 2015 by 20%, while the number of transactions is growing right now.

- in Ljubljana, the revival/revitalization of most multi-unit housing construction projects after the crisis, although there are not enough new apartments for the new building.

- Great interest in buying apartments after bankruptcy - demand exceeds supply by 10 times - an example of the sale of “Celovških dvorov” in Ljubljana.

- Acquisition of banks by foreigners - Apollo fund bought three Slovenian banks, combined them and now it is the second largest bank in the state.

 

2. How is economic growth expressed in practical terms? (You can tell how it was 2-3-5 years ago)

 

Among the most important data showing economic recovery is undoubtedly a large drop in the number of unemployed. In March 2013, 10.8% of the unemployed lived in Slovenia, today only 7%, and some sectors already face the problem of labor shortages.

 

This year, Slovenia has seen steady economic growth of 4.4%, and the forecast for 2018 is 3.9%.

 

Five years ago, the real estate market was almost dead, without new buildings and with a small number of transactions with old dwellings. Banks reluctantly provided financing for housing construction 4-5 years ago. Banks absolutely did not support any major construction work for the market, at best, individual housing construction for the needs of the investor. As already has been mentioned, most of the construction projects that have been frozen are being now revived, new projects are opening up, banks are again financing the construction of residential real estate for the market.

 

3. What percentage of the loan can a borrower get in case of a purchase?

 

- residential real estate - the percentage moves up to 50%,

 

- shopping center - percentage moves up to 70%,

 

- development project - there are no rules, we are talking about an individual approach and it depends on many factors.

 

4. What are the requirements for a recipient of a loan today?

 

It is important that the client cooperates with a share of own funds and is sure that future income - cash flow - provides the possibility of repaying the loan. In this case, banks require a certain collateral in the form of real estate (property that is acquired or built on a loan), assigns receivables, guarantees and the like.

 

5. How complicated is the process of obtaining a loan?

 

The procedure is relatively simple if all the conditions from the previous question are fulfilled. In case of discrepancies in individual requirements, the bank, depending on the overall quality of compliance with the requirements, decides whether to finance the project or not. The bank allows itself, for example, a lower level of insurance, if the borrower's operation is very good, or vice versa, if the insurance is first-class, it can extend the term for additional payment and thereby increase the possibility of repayment of cash company funds.

 

6. How many failures?

 

In cases of well-prepared and realistic proposals, failures are rare. In the event that all conditions are formally fulfilled, refusals are an exception and for the most part are caused by a “reputation risk” for banks due to cooperation with customers who have a negative “image”.

 

7. What verification does the bank carry out when issuing a loan?

 

Existing customers have the verification that I have already indicated. The check is mainly intended to identify the ability to repay the loan, that is, the provision or availability of cash in the future and quality insurance.

 

In the case of new customers, all banks initially participate in the process of familiarization with the customer, which requires the presentation of the customer with all the usual documentation about the owners, company management, existing balances, if the company is already working or not, its plans for the future ... and, of course, confirmation of the money origin, which represent the company's own participation in project financing, if we are talking about a newly created company that provides itself with funds for its own participation in the project with the payment of capital or a loan from the owner of the company.

 

8. What will the bank value: when buying a house, buying a business building, development project?

 

When buying a house or office building, the bank is interested in evaluating the property by an independent appraiser, the size of the borrower's own participation and the cash flow assessment that the borrower can provide to repay the loan through its existing or new activities.

 

There are no specific rules for a development project in relation to the procurement of office buildings, since these are usually new, unverified items, which are evaluated by banks mainly depending on who the borrower is and the burden of the new project for existing activities, how much new activity can bring in terms of cash flow. In case of success of the company, insurance claims, of course, are correspondingly reduced.

 

9. What types of investments are most interesting to banks and why?

 

Banks are most interested in investing in projects that provide stable cash flow, which ensures the borrower's ability to repay the loan. Of course, business buildings with quality tenants are also valued.

 

The current situation is also favorable for real estate projects, because in Slovenia, due to past events and a negative attitude to market construction, which reached the lowest level in early 2015, there was a serious shortage of new offers on the residential real estate market.

 

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