Realty firms seek priority sector status for low cost housing
Demand comes a day before RBI's policy review
Dec 20, 2013
Source : Business Standard


DELHI: After exporters, real estate companies are demanding a priority sector tag for loans to the low-cost housing sector.

“RBI (Reserve bank of India) should expand its scope of ‘priority lending’ to cover lending to developers involved in low-cost and affordable housing, as cheap funding is extremely critical for them to develop low-cost housing projects,” says a report by the Confederation of Real Estate Developers’ Associations of India and Cushman & Wakefield.The report, which comes ahead of RBI’s mid-quarter monetary policy review scheduled for Wednesday, doesn’t specify what is meant by low-cost housing. Budget 2012-13 had provided interest subvention of one per cent on housing loans of up to Rs 15 lakh, provided the cost of the house didn’t exceed Rs 25 lakh. Housing loans of up to Rs 15 lakh to individuals already come under priority sector. Real estate companies want this to be extended to loans availed by developers.

These companies also want RBI to declassify the real estate sector as high-risk. This, the report said, would be possible if the sector was given infrastructure/core sector/industry status. “Housing should be recognised on a par with the infrastructure sector and should be given cheaper project finance. Also, the roll-over facilities should be on a par with those of other industries,” the report said. Real estate companies have said currently, the sector has a high risk weight of 1.25. Lowering of risk weights will result in lower interest rates on loans and increased availability of banking and financial institutional funds to developers, as well as individuals. The companies also want RBI to promote the secondary mortgage market through mortgage-backed securities and collateralised mortgage obligations, with safeguards to avoid a sub-prime crisis.

They said the persistently high inflation had hit individual buyers in many ways. Amid lower disposable incomes and savings, they were faced with increasing housing prices and the high interest rates on mortgages.

The report said the increasing population and urbanisation, coupled with the housing shortage of 62.45 million units, was leading to huge stress on the economy. Currently, an estimated 65.5 million people reside in slums. While many countries had a correlation of housing to gross domestic product that exceeded 0.9, in India the correlation was estimated at 0.78, the report said, adding it was estimated the sector had forward and backward linkages to about 300 ancillary industries.





Latest Realty News

Realtors See Realty Boom Post-polls
Dec 20, 2013
HYDERABAD: Several real estate associations of South India converged at the two-day conference organised by the Confederation of Indian Industries here to discuss various aspects and prospects of real estate sector.
Sand mining crackdown to hit real estate industry
Dec 20, 2013
AHMEDABAD: The stopping of sand mining in Gujarat is expected to dent the construction industry in a major way. Following National Green Tribunal's (NGT) order, builders in the state are expecting the cost of raw materials to hit the roof.
Joyalukkas Ventures into Real Estate Biz
Dec 20, 2013
KOCHI: Jewellery retailer Joyalukkas group ventures into the real estate sector with Joyalukkas Lifestyle Developers.
Before you invest in property
Dec 20, 2013
MUMBAI: In recent times, a number of high net worth individuals have received calls or mailers from builders or websites to encourage them to invest in property. The deals sound lucrative, with annual returns of 12 per cent and other benefits.
LMW joins hands with Sobha to launch project in Coimbatore
Dec 20, 2013
COIMBATORE:Textile machinery manufacturing major Lakshmi Machine Works has partnered with property developer Sobha to promote a housing development project, élan, at Ganapathy in Coimbatore. The project is coming up on a 4.76-acre plot owned by LMW.
VUDA promises to complete mega housing scheme
Dec 20, 2013
VISAKHAPATNAM: The Visakhapatnam Urban Development Authority (VUDA) will complete the mega housing scheme - Haritha - at Endada in the city and the allottees need not entertain any doubts on that count, according to Vice-Chairman N. Yuvaraj.
IndiaProperty gets $12-m funding
Dec 20, 2013
CHENNAI: Real estate advisory portal, held by India Property Online Pvt Ltd, has received its second round of funding of $12 million (around Rs 75 crore) from Bertelsmann, with participation from existing investors Canaan Partners and Mayfield Fund, who got on board India Property in April 2012.
Piramal's PE fund, 2 others in race for stake in Vardhman's 2 realty projects
Dec 20, 2013
MUMBAI: Billionaire Ajay Piramal's real estate focused private equity fund Indiareit Fund Advisors, US-based real estate fund Capri Capital Partners and Edelweiss Capital are in the fray to acquire a stake in Mumbai-based realty company Vardhman Developer's two real estate projects.
India Property raises Rs 74.67 crore in second round of funding
Dec 20, 2013
BANGALORE: Online real estate classified portal India Property Online Pvt Ltd raised $12 million (Rs 74.67 crore) in a second round of funding led by Bertelsmann India Investment along with existing investors Canaan Partners and Mayfield Fund.
Connaught Place seventh costliest office mkt in world: CBRE
Dec 20, 2013
DELHI: Connaught Place in Delhi has slipped two notches to become the world's seventh costliest office destination due to slowdown in the realty market and fall in rupee's exchange rate, property consultant CBRE said.

Latest Realty News Of State

Realty Talk's