Shares in developer DB Realty hit a record low on Monday after its Managing Director Shahid Balwa, embroiled in a widening telecom corruption investigation, resigned from his position.
With only $400-500 million of foreign funds flowed into the Indian real estate sector in 2009-10, the outlook ahead seems to be far from being rosy.
For the Union Budget 2011-12, rising inflation, tight liquidity, high interest rate, industrial slowdown, delayed reforms and negative market sentiment were some of the key concerns to address.
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.
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.
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.
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.
The RBI and market regulator SEBI have enhanced their vigil on funds coming from Mauritius, suspecting round-tripping or routing of illicit money back through the island nation.
I am relatively dissatisfied with the budget focus on the sector as no efforts made to the growth of the sector. My wish list to the Finance Minister is to relax the provisioning norms of banks for Real Estate loans, sector status to real estate, clarity on service tax & VAT, with some relaxation and to increase the interest exemption on Housing loan. But then the Finance Minister has not consulted the industry representatives in the last few years.
The Reserve Bank of India has asked banks to put in place an escrow mechanism that can ring fence their loans to real estate firms and keep a closer tab on the end use of funds. The RBI has been looking to tighten the lending norms for the real estate sector after last year’s bribery-for-loan scam. The scandal also exposed several unethical practices, such as diversion of funds.