The real estate sector in Punjab expects the union budget 2011-12 to spell out measures which provides revival of buyers for the sector.
With interest rates firming up since last year and still no chances of rates heading southwards , real estate business has become a tough proposition for the industry in lieu of higher interest rates.
The higher interest rates has not only impacted borrowing, both long term as well as short term, for the builders but similar impact has befallen on the buyers as builders fear buyers may procrastinate their decision to purchase property.
With home loans and financing rates having substantially risen, the industry expects incentives for the home buyer, the demand may come down and the sector will be badly affected.
Assocham Real Estate Council Chairman and Raheja Developers Limited CMD Naveen Raheja said, “In real estate, the most important issue is the availability and accessibility to cheaper finance and incentive to home buyers particularly in the Low Income Group (LIG) and Middle Income Group (MIG) segment. “In the past six months, the home loan and project financing rates have accelerated substantially and it is expected to further go up. In this scenario, if the government does not give incentives to home buyers, the demand may come down and the sector will be badly affected.”
Raheja said the industry was looking for an upward revision in the interest on home loan deduction and rebate in repayment of home loan under section 80 C .
Emaar MGF Land Ltd Executive President Sanjiv Saddy maintained, corporate financing rates have trended up in the last year and the overall environment is impacted by such a move. Hence, additionally, tax rationalisation would be positive for the sector.
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In addition to seeking tax rationalisation the industry also favours the public-private partnership (PPP) mode especially for constructing low-cost and affordable housing.
Tata Housing Development Company Ltd MD and CEO Brotin Banerjee believes, with land cost mushrooming across the cities, it was imperative for the government to step in and become a stakeholder in the housing project addressed for relatively weaker sections of the society. The PPP mode is best suited for narrowing the chasm between requirement and availability of dwellings.
In addition to this, the sector which considers itself to be among the asset class also expects appointment of watch dog.
The appointment of regulatory authority not only would offer a level playing field but also would protect the interest, both of the developers as well as the builders.