New Delhi: Even as the government embraces proactive steps to bolster the economy—real estate sector included—experts believe that momentum in the ongoing initiatives should also be maintained.
Steps like allowing ECBs for affordable housing, trying to bring interest rates down and opening up the retail sector are among them, but Samir Jasuja, founder and CEO of Propequity, a real estate research intelligence firm told Firstpost in an exclusive interview that his biggest expectation from this budget session is that the real estate regulator bill be passed. “It will be good for retail buyers of real estate,” he said, adding that he is also hopeful of the sector being granted industry status.
“Giving the real estate sector industry status will allow real estate firms to raise capitals at much lower rates. And capital is the biggest need for the cash-strapped developer today, who borrows at 18 percent-24 percent and all of their profits is going towards servicing those debts. Industry sector status will give it priority sector lending (in terms of money available) and loans at a lower rate. All of which will boost the sector,” Jasuja said.
He said that the regulator bill if passed and enacted will be beneficial to the consumer and retail buyer.
Jasuja is also of the view that the government should boost affordable housing by releasing land banks to developers or offer PPP partnership — with the government giving developers land and funding to developers for construction. “This needs to be done in areas where infrastructure already exists. There’s no point in creating rental housing where there is no demand. The government has to create land banks which can be given out for rental housing opportunities,” he told Firstpost.
The government should also offer land banks in areas where there is livability and social infrastructure, increase FSI (floor space index), FAR (floor area ratio) and also density norms so that more families can buy into affordable housing.
He said the problem in affordable housing exists because profitability is not very high.
The problem of vacant homes, Jasuja said, arises from people preferring to keep their houses empty as the laws in India are strongly in favour of tenants and not in favour of the home owner.
“Many people prefer to keep their houses locked up and invest in them for capital appreciation. So in those cases you have to come out with better laws to create a situation where those houses come up for usage into the system. That can happen on if you provide better laws, in favour of the landlord,” he said.
Jasuja said that by asking builders to reduce prices and pay off banks and by asking banks to resume lending to incomplete projects, the finance minister is giving a good message. “Developers today are holding onto prime land banks which they don’t want to market at lower prices — they rather keep on borrowing from the banks and servicing those debts because they feel those land banks will give them further appreciation and profit opportunities,” he said.
Also, by asking banks to fund under construction projects, he will help the end user — who just gets stuck if the project is incomplete. “In any case once a project is completed it’s a win-win situation for all – bank, consumers and developers,” he said.
Overall, Jasuja is of the view that if this year’s estimated delivery of around 500,000 housing units which are slated to be delivered, get delivered and if the government continues to take proactive steps, the real estate sector will see very exciting times in the coming year.