With real estate developers facing a liquidity crisis, realtors' body NAREDCO today said banks should change their outlook towards the sector and be liberal in financing builders.
National Real Estate Development Council (NAREDCO) also demanded that density and FAR (floor-area ratio) norms should be changed to boost housing supply.
"Banks should change their outlook towards this sector. High risk weightage has been given to real estate by RBI," NAREDCO Chairman Rajeev Talwar told reporters here.
He argued that real estate is the only industry where there is a "collateral at every stage".
In the absence of bank financing, the developers have no option but to raise funds from private equity firms at a very high interest rate of 18-26 per cent, he said.
Real estate sector is facing huge demand slowdown for last 3-4 years that has led to major delays in execution of projects, forcing buyers to protest on streets.
Talwar said the Real Estate Investment Trusts (REITs), which has become attractive after various tax sops, would become a major avenue for inflow of foreign funds into the commercial real estate sector.
"Developers can use this fund for creating newer assets," he said.
Talwar also announced that NAREDCO would hold its 13th national convention during August 19-20 in New Delhi to chalk out strategies for achieving the target of 'Housing For All' by 2022.
NAREDCO President Parveen Jain said the main objective of the convention is to deliberate on the existing real estate scenario and prepare road map for various legislative, regulatory, administrative and financial reforms.
Asked about the real estate regulatory law, Talwar, who is also realty major DLF's CEO, said this would lead to more transparency in this sector.
"We do need a regulator. It should not become a controlling authority. It should be run properly," Talwar said, adding the industry needs some clarity on some of the provisions of the law.
On rising consumer complaints over delay in completion of projects, Talwar asked buyers to write to NAREDCO while promising that their complaints would be taken up with their member builders. "It gives us a bad name. We will attend to their complaints," he said.
