Real estate has appeared as a hot investment target with banks in recent times. The projects in other sector have faded, prompting banks to fund commercial reality despite slow demand in the real estate sector.

Of the 180 projects of Rs 280 cr that came for funding in the first half of 2013-14, 56 were real estate projects that are estimated to cost nearly Rs 65,000 cr. The sector lags only iron and steel, where the cost of 14 projects is around Rs 64,300 cr.

Funding for commercial properties in addition to home loans, which rose by 21 pc to almost Rs 5,700 cr by October-end this year compared to last year.

In the middle of a slowdown, experts send out a cautionary note is if real estate exposure of banks is going up, then the market demand seems to be going down and the market risk is supposed to be higher. But several projects are covered through lease rentals, which reduce a little amount of risk.

Merchandise bankers and property experts, however, play down the concerns. The property sector offers them the possibility to earn more compared to telecome or pharma.  Basically bankers believe funding real estate is not risky as it is shown to be.

The funding is much lower at around 12 pc of the project cost and the expenditure will be over the next five-seven years. It also helps steel, cement and employment sectors.