What exactly is a property bond?
Property bonds, also known as property investment bonds, are a way for developers to borrow funds in the form of a loan from investors. The goal is to fund projects while they are still in the early phases of development.
The bond, in general, is a legally enforceable contract between the investor and the property developer. The investors’ capital is offered to the development firm as a loan, and the agreement between them defines how the investment will be used, how the interest will be paid, how the capital will be secured and when the investment will be reimbursed to the investor.
The higher set annual interest rate, backed by a certificate and security over the property they are helping to fund, often appeals to investors.