Thursday, June 18, 2009

Realtors wait to hear FM music Assetventures

The ministry of housing has taken kindly to the set of demands put across by the real estate developer associations.

The ministry officials are meeting their counterparts in the finance ministry to ask for specific stimulus for the real estate sector.“Liquidity is still a major concern for the sector andthe government needs to provide specific stimulus for its revival,” a senior official in the housing ministry told FC Estate. He added that the ministry would approach the finance ministry to structure the incentives in a way that it generates fiscal concessions for the sector.In fact, over the last week the real estate associations Naredco (National Real Estate Development Council) and Credai (Confederation of Real Estate Developers Association of India) had put across a slew of demands to the secretary, ministry of housing.Though officials of housing ministry remain tightlipped over the exact concessions demanded, developers are expecting that the government will allow an extension of the loan restructuring facility beyond June 2009. The present provisions allow a developer to go for one-time restructuring of debt. Though developers have been able to raise money through the qualified institutional placement (QIP) route over the last couple of months, liquidity still eludes them.“A moratorium on the payment of interest and extension of time for restructuring of debt taken by the real estate developers will help us execute projects on time,” Rohtas Goel, president Naredco told FC Estate. He further said that the finance minister’s move to ask banks to lower their borrowing rates is a welcome step. “I am hopeful that the move will extend the affordability of loans to a large number of people and for the manufacturers and suppliers. The move will help in reviving the real estate sector through reduction in home loan rates.”Further, if the government allows a developer to avail overseas funds through external commercial borrowings (ECB), it will ease cash flow to the sector. At present, ECB is prohibited for housing development. “ECB in housing construction will supplement the funds from banks and financial institutions and, in the long term, reduce the cost of finance, thereby reducing the price of houses in the country,” said Pradeep Jain president Credai (NCR).Further, if the group housing and integrated township development is brought within the definition of infrastructure it will also help in the sector’s revival. “This will ensure a wider finance window for these projects. As a safeguard, a developer may be required tobuild at least 100 residential units in such projects,”quipped Goel.However, how much of these demands actually pass the muster of finance minister remains to be seen.

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