Property bonds, otherwise known as property investment bonds are a means for developers to raise money from investors in the form of a loan. The intention is to fund the projects during the earlier stages of development. Generally, the bond it is a legally binding agreement between the investor and the property developer.
The investors’ capital is offered as a loan to the development company and the contract between them explains how the investment will be used, the interest payable for the investment, how the capital will be secured and when the investment will be repaid to the investor.
From an investors’ perspective, the appeal is often the higher-rate fixed annual interest, backed by a certificate and security over the property they are helping to fund.