Hope on the horizon
ET Realty, May 29, 2009, Page 1
With the new government being formed, there is a ray of hope that the real estate sector just might be up and running this year end
Tanvi Rustagi
Hope is in the air and everyone wants a whiff of it, including the real estate sector. The Indian real estate sector has been through one of its worst blows in recent times. With UPA sweeping the majority in elections and the Indian citizen taking the front seat, it seems like this time hope will turn into reality.
But what does revival mean to the realty sector? Vijay Jindal, CMD, SVP Group explains, "Recovery will mean a stable market where buyers regain the confidence in the real estate sector. It would also mean that the developers get support from the government in completing their projects. Developers are waiting for the right environment to prevail for the sector and this can only happen if the government steps in and takes some positive initiatives."
Rohtas Goel, CMD, Omaxe states, "We expect the government to promote affordable housing and provide a helping hand to the rising need of the affordability factor for housing needs. We expect the government to hold special funds for building such corridors with easy clearance for the projects."
Due to a sweeping majority, there is much ado about what the UPA government will deliver. Bhim Yadav, CEO of Falcon Realty Services Pvt Ltd avers, "With the philosophy of the UPA government being of interest to the common man, everyone is hopeful that they will introduce suitable measures for the affordability of homes."
In the present scenario, the main challenge lies in providing housing solutions for all segments. Builders should focus in minimising their profits and building homes. The ratio between profit and development should be balanced because it is the buyers market now and speculative prices have no place. Navin M Raheja, chairman, Raheja Developers, Pvt. Ltd. says, "One of the most important issues for the government to address right now is financing. The reason is that banks have virtually stopped financing any real estate projects. Lending to the builders has also become extremely difficult as they are asking for additional security/guarantee for home loans. In fact, many of the banks are forcing their own payment schedule based only on the cost of construction, without factoring land cost, administration cost, marketing cost, approval cost, etc., thereby resulting into a deficient cash flow for the developers. The government should take steps to liberalise finance for the sector or allow external commercial borrowings for real estate and relax financing norms." But that's not all. Other hopes from the government include issues such as recognising integrated townships as infrastructural projects, single window clearance and rationalisation of property taxes, stamp duty and registration expenses across states with external development charges, rationalising license fees and other government levies.
However, before any kind of expectations, there are some who are caught in the middle of incomplete projects due to the deficient cash flow that the developers were facing. The completion of any project depends on the builder's capability. Past losses need to be borne by the developers as well as the investors, in order to complete the ongoing projects within time. Raminder Grover, CEO, Homebay Residential (subsidiary of Jones Lang LaSalle Meghraj) informs, "With market improvement and transaction numbers increasing in the market, more cash flow is available with the developers and hence, they should be able to complete their projects by the end of this year." With hope on the horizon for the real estate sector, everyone seems to be of the opinion that the sector just might be able to rise from the ashes by the end of this year. Brotin Banerjee, managing director and CEO, TATA Housing tells, "With the world's financial markets suffering extraordinary volatility and stress in the last three months, the financial crisis is now feeding through to many areas as people are avoiding high value purchases. Nevertheless, we are now witnessing the government, the Reserve Bank of India and commercial banks of both public and private genres, coming out with a series of fiscal and monetary measures to boost the sector, especially housing.
ET Realty, May 29, 2009, Page 1
With the new government being formed, there is a ray of hope that the real estate sector just might be up and running this year end
Tanvi Rustagi
Hope is in the air and everyone wants a whiff of it, including the real estate sector. The Indian real estate sector has been through one of its worst blows in recent times. With UPA sweeping the majority in elections and the Indian citizen taking the front seat, it seems like this time hope will turn into reality.
But what does revival mean to the realty sector? Vijay Jindal, CMD, SVP Group explains, "Recovery will mean a stable market where buyers regain the confidence in the real estate sector. It would also mean that the developers get support from the government in completing their projects. Developers are waiting for the right environment to prevail for the sector and this can only happen if the government steps in and takes some positive initiatives."
Rohtas Goel, CMD, Omaxe states, "We expect the government to promote affordable housing and provide a helping hand to the rising need of the affordability factor for housing needs. We expect the government to hold special funds for building such corridors with easy clearance for the projects."
Due to a sweeping majority, there is much ado about what the UPA government will deliver. Bhim Yadav, CEO of Falcon Realty Services Pvt Ltd avers, "With the philosophy of the UPA government being of interest to the common man, everyone is hopeful that they will introduce suitable measures for the affordability of homes."
In the present scenario, the main challenge lies in providing housing solutions for all segments. Builders should focus in minimising their profits and building homes. The ratio between profit and development should be balanced because it is the buyers market now and speculative prices have no place. Navin M Raheja, chairman, Raheja Developers, Pvt. Ltd. says, "One of the most important issues for the government to address right now is financing. The reason is that banks have virtually stopped financing any real estate projects. Lending to the builders has also become extremely difficult as they are asking for additional security/guarantee for home loans. In fact, many of the banks are forcing their own payment schedule based only on the cost of construction, without factoring land cost, administration cost, marketing cost, approval cost, etc., thereby resulting into a deficient cash flow for the developers. The government should take steps to liberalise finance for the sector or allow external commercial borrowings for real estate and relax financing norms." But that's not all. Other hopes from the government include issues such as recognising integrated townships as infrastructural projects, single window clearance and rationalisation of property taxes, stamp duty and registration expenses across states with external development charges, rationalising license fees and other government levies.
However, before any kind of expectations, there are some who are caught in the middle of incomplete projects due to the deficient cash flow that the developers were facing. The completion of any project depends on the builder's capability. Past losses need to be borne by the developers as well as the investors, in order to complete the ongoing projects within time. Raminder Grover, CEO, Homebay Residential (subsidiary of Jones Lang LaSalle Meghraj) informs, "With market improvement and transaction numbers increasing in the market, more cash flow is available with the developers and hence, they should be able to complete their projects by the end of this year." With hope on the horizon for the real estate sector, everyone seems to be of the opinion that the sector just might be able to rise from the ashes by the end of this year. Brotin Banerjee, managing director and CEO, TATA Housing tells, "With the world's financial markets suffering extraordinary volatility and stress in the last three months, the financial crisis is now feeding through to many areas as people are avoiding high value purchases. Nevertheless, we are now witnessing the government, the Reserve Bank of India and commercial banks of both public and private genres, coming out with a series of fiscal and monetary measures to boost the sector, especially housing.
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