It would seem that the Union Budget 2011 pointedly ignored the larger issues affecting the Indian real estate sector at this sensitive stage of revival and growth.
We are happy with the governments focus on affordable housing. Loan amount that qualifies under priority sector lending. Now, a home loan of Rs. 25 lakh would qualify as priority sector lending.
Real Estate may boast off to be the second largest economic activity and the largest employment provider in the economy, but when it comes to have a say in the policy making, they are found to be sulking.
Reforms in the real estate sector is the need of the hour for tackling issues like high stamp duty which often results in otherwise honest people having to deal in black money, according to the Economic Survey 2010-11 tabled by Finance Minister Pranab Mukherjee in the Lok Sabha on Friday.
The cash strapped realty companies can have a breather in budget for 2011-12 as the Finance Minister is expected to make announcement of a guarantee corpus for banks on realty lending. Track2Realty has learnt that the banks will get this guarantee corpus of Rs. 1000 crore to lend for housing projects.
Nearly all the real estate developers, a whopping 96 per cent, across the country are cribbing for the sectors’ continued under representation in the Union Budget over the years.
Public sector banks including State Bank of India, Bank of Baroda, Bank of India, Indian Overseas Bank have served notices to dozens of real estate companies to recover around Rs 20,000 crore of their exposure by March.
The Confederation of Real Estate Developers’ Association of India (CREDAI) has forecasted Kochi to emerge as the next realty hot spot in the wake of the commissioning of the International Container Transshipment Terminal (ICTT ) at Vallarpadam. CREDAI believes the prices of land and buildings are all set to skyrocket as it will generate more direct and indirect employment opportunities.
As real estate prices shoot up and interest rates, the outlook for the sector does not look too bright. In its year-end report, Knight Frank has stated that new home sales in India have fallen by 25 per cent due to soaring prices. With the Reserve Bank of India tightening lending norms to developers and raising interest rates, the property market is likely to plumb new lows in 2011 as buyers disappear.
If you are living as a tenant in Mumbai and seeking to buy a house this year, there seem to be quite a few confusions going around. While some of the reports and projected forecasts may give you a ray of hope, it would rather mislead you and your wait for a cheaper home may actually cost you to pay more in future.