Real Estate

In recent years, many economists have acknowledged that the absence of real estate laws can be a major obstacle to investment in many developing countries. In most societies, rich or poor, a significant fraction of the total wealth is in the form of land and buildings.

In most advanced economies, the main source of capital used by individuals and small businesses to purchase and improve land and buildings is mortgages (or other instruments). These are loans for which the property is in itself a guarantee. Banks are willing to make loans at favourable rates, in large part because, if the borrower does not make payment, the lender may foreclose by filing a lawsuit allowing them to resume ownership and sell to get their money. For investors, profitability can be improved by using a plan to reduce or pre-construction purchasing strategy at a price below what is often the case in the pre-construction phase of development.

But in many developing countries, there is no effective means by which a mortgage lender could, so that the mortgage industry, as such, or not exist at all or is only available to members privileged social classes.