Home Loan Rate Should Be Restructured.

With speculations about the Union Budget 2012-13 already doing the rounds, city’s real estate industry too has voiced its expectations. Mainly revolving around increased subsidy on interest rate for loans towards affordable housing and industry status for taxation and construction and relaxation of FDI up to 51 per cent into multi-branding, the industry is hopeful of a favourable budget.

Sushil Mantri, president of CREDAI, Bangalore, says that “The Indian real estate industry was riding through highs and lows in 2011. Last year, one per cent interest rate subsidy was offered for loans towards affordable housing. If the subsidy can be broadened, home buyers especially in mid and lower income groups will benefit.”

“Indian real estate, especially housing needs the government’s support for further growth. The government should consider restructuring interest rates on home loans to attract larger base of lower and middle income group to benefit. For loan amounts lesser than Rs 25 lakh, the interest rate should be lower and should scale up as the loan amount goes higher,” said Sankey Prasad, chairman and MD of Synergy Property Developments Services.

Further the Experts demanded that the glaring concerns of the real estate industry be addressed.

“The real estate industry will be looking forward to RBI’s intervention to control inflation which has adversely affected the industry. If FDI is relaxed up to 51 per cent in multi-branding, this will boost the growth path for the Indian retail industry,” Sushil Mantri added.

Residential Growth Sustains Prices, but Outlook’s Changed

The real estate market has witnessed more or less a stable pricing scenario in the last 03 quarters after seing a sharp increase in the 02 years that followed the subprime crisis of 2008.

A Delhi based research result for real estate, the volume growth in the residential segment has improved inspite the increase in the interest rates. This keeps the property prices at higher levels. The Chennai real estate market tops the chart with increase in demand from both commercial and residential segments.

However, the Mumbai market has witnessed a correction in the last 03 quarters due to a delay in project approvals. The outlook on future price trends is mixed. Also, a drop in property prices looks distant in cities with lower inventory. On the financial front, most real estate players have reported better results on the back of higher sales volume.

Real estaters normally have execution issues which impact their debt repayment schedules. To tackle such issues and achieve greater transparency, companies are focusing more on product positioning and improving project execution certainty. On the other hand, qualitative factors such as hassle-free land bank and developer’s goodwill in getting land approval will improve company positioning with customers.