Venue—Hotel Kohinoor Continental, Mumbai
Moderator—Pranay Vakil—Chairman Praron Consultancy
Atul Modak—Head-Kohinoor City
Gaurav Gupta—Director, Omkar Realtors & Developers
Jhumur Ghosh—National Feature Editor, Times of India
Ravi Sinha—CEO & Managing Editor, Track2Realty
Ravi Sinha: Even in the Indian context, if you look at the places like Gurgaon. Had there been no infrastructure no one would be living over there and that is how NCR has evolved as a case study in satellite towns. But the disconnect is with the funding.
My point is you talk about the ECB but then is there any clarity? You expect pension funds and all to come into your business at a time when your own banks are not ready to finance you. From where will you bridge this trust deficit?
Pranay Vakil: I would like to know developers who are here whether they have taken advantage of ECB. And if they have not, what must be the reason?
Gaurav Gupta: I think it is bit too early because the notification for the ECB is just out, and they are trying to work on the mechanism to prevent misuse of it. They are trying to bring national housing bank to get involved in it from the regulatory prospective. A bit of clarity is required before I think developers can go ahead.
Pranay Vakil: This is for the first time that in the budget the Finance Minister has said that for affordable housing you can borrow from abroad which is in the ECB route. And since that day, March onwards I really do not know if any of the companies have really gone out and taken advantage of that and the reason why that could not happen is because in this period we have seen maximum volatility in rupee-dollar and what concerns the borrow is when I repay if rupee has crossed 60, my repayment would be costlier.
There is another school of thought that says that the rupee will come strong ahead and may become 45 again. Then borrowing in the ECB market would be a great bonanza because you take so much rupee and when you repay, you repay less.
Atul Modak: One more factor we have to keep in mind is that when affordable housing is concerned, ECB is only one aspect of it whereby reducing the funding cost. If we talk about tier II cities where cost of the land is less and cost of the funding is more then it makes sense. In tier I cities where the cost of the land is major cost of the project, ECB will not help much. Instead of that if the government comes out with schemes where buyers incur subsidized taxation and developers get more FSI, that may be of help in tier I city like Mumbai.
Gaurav Gupta: Even the definition of affordability is very important. What is affordable in tier II and tier III cities can not be the definition of tier I.
…to be continued
