Acting on the union
finance minister Mr. P Chidambaram's advice asking real estate compaines to
download unsold stock at discounted prices, CREDAI ( ), the apex body of real
estate developers / promoters in India has offered him a counter advice; first
bring special incentives to boost purchase of houses.
The minister, P
Chidambaram, had earlier asked chiefs of state government owned banks to
pressurise real estate developers / promoters to lower property prices and get
the economy moving.
Real
Estate Kick Starts Economic Development..!
Mr. Lalit Kumar Jain,
National President, CREDAI said, "We are happy that at last the government
has realised that real estate kick starts economic development.
 |
| Lalit Kumar Jain, National President, CREDAI |
Mr. Lalit Kumar Jain
is also the CMD (Chairman and managing director) of Pune based Kumar Urban
Development Ltd. "We ourselves have asked member developers to start
selling even at rock bottom prices as early as 3 month ago. Nobody would like
to block his capital by sitting on unsold stock that too in a very high
interest regime. On the one hand, banks and HFCs (Housing Finance Companies)
are discouraged to lend to real estate developers / promoters while on the
other cost of funds from non banking sources is prohibitively high," he
also said.
CREDAI has been lobbying with the government to push
for reforms in the real estate industry, which Mr. Lalit Kumar Jain maintains
has become a victim of official apathy and indecision.
Protest
Government Apathy..!
In March this year
(2012), about 20state chiefs and nearly 120 city chiefs of CREDAI met in Pune
to protest government apathy, which includes administrative delays,
contradictory approval requirements and liquidity crunch due to lack of
infrastructure status to real estate sector.
He further said that
in wake of this apathy, real estate sector always had to face high interest
regime. Banks and HFCs still wary of financing Real Estate sector as RBI
(Reserve Bank of India) always keeps it in the negative list.
For the last 2 years,
liquidity in general & access to bank credits in particular has been
restricted due to variety of risks. Therefore, unlike any other sector of
economy, real estate sector has also found it difficult to tap bank resources,
bank credits, he stated. "It is ironic that while housing loans area top
priority, the housing developers are not" Mr. Lalit Kumar Jain regretted.
Administrative Delays..!
Developers across pan
India face administrative delays in getting government approvals for their
projects, leading to cost escalations. The recent expose of various land scams
& subsequent arrests of government officials, including IAS cadre, have led
to further delays as officials try to avoid signing files for as long as they
can. In many cities, occupied projects do not get completion certificates for
up to 3 to 4 years, Mr. Lalit Kumar Jain had earlier said.
He said it takes 2 to
3 years for a project to become saleable from the time it is submitted for
approval. A project requires approvals, certification & no-objection
clearance from minium 50 government departments, and this number reaches 90 in
some states & cities. Some approvals are overlapping and some are
contradictory, which creates a lot of hurdles and leaves room for corruption,
he had said.
The other key factors
that add to the high cost of realty are the ever increasing local municipal
taxes, ready-reckoner rates for deciding stamp duty, cess and even VAT (Value
Added Tax). For instance in Mumbai, the financial & real estate capital,
burden on developers has risen on account of fungible area. Cost of labour has
gone up by as high as 60% over the past 2 years.
"CREDAI,
therefore, appeals to Mr. P. Chidambaram to look at ways to bring down the cost
of construction while taking steps to encourage buyers to have houses of their
own," Mr. Jain said.
"As things stand, it is unrealistic to
expect developers to cut down prices of even of some of the unsold stock as
they had already incurred the high cost and it does not make business sense for
us to go out of pocket," he added.
Src: ET
No comments:
Post a Comment