Realty Projects Likely To Turn Affordable

Bangalore: Recently, the Finance Minister, P. Chidambaram wants developers to reduce property prices and asked government-owned banks to create pressure on real estate developers to lower the prices, which in-turn will beat economic slowdown. However, CREDAI took initiative to come forward and insisted around 8000 members to look into this proposal attentively, reports Times property.

CREDAI National President Lalit Kumar Jain stated that “We are happy with proposals by the Finance Ministry to help developers. We are confident that they will encourage plans like single window system of clearances to speed up the process, banks to reduce interest rates and affordable housing.”

Apart from price reduction which is of course a rejoicing factor for home buyers, there are other factors as well which need intense attention. “The general impression is that high prices being quoted by builders’ stems from a profit motive. While profits are definitely an objective in any business, builders have been paying a lot more for developing projects. Obtaining 57-odd permissions to begin construction takes two years and cost of holding land also rises. Builders have to cover several external and internal charges, which have also risen,” said Anuj Puri, Chairman and Country Head, Jones Lang Lasalle India.

On this context, Sanjay Dutt, EMD – South Asia, Cushman & Wakefield stated that if developers reduce the property prices at least by a slight margin then they might witness demand for housing. “This will be applicable to locations which are price sensitive. While maximum benefit will be for peripheral and suburban locations where target segments need relief on pricing, given cost dynamics, developers do not have enough margin for significant price corrections,” said Dutt.

Manoj John, VP-Corporate Planning and Strategy, RNA Corp cited “There is future opportunity for reducing prices, provided the government supports it by bringing key reforms on bank lending norms to the sector, multi-level taxation and special incentives for affordable housing, reducing cost of approvals.”

“With estimated housing shortage of 11.8 million units for 2012-2016 and soaring capital values beyond affordable levels, price cuts will give a huge boost to housing demand. A joint effort by the Government, financial institutions and developers may be the only way to find a lasting solution for keeping demand buoyant,” added Dutt.