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| Realtors see 6-mth delay in revival |
| BS Reporter / Mumbai Feb 17, 2009, 00:56 IST |
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Any revival in the real estate sector is expected to be delayed by at least six months as the interim budget did not announce any sops to the housing sector as anticipated by many companies.
“Sentiments of home buyers have not completely improved yet. The government should have taken some steps to improve sentiments for Aam Admi, which has not happened. Now we have to wait for the new government to assume charge in June,’’ said Pradeep Jain, chairman of Parsvnath Developers.
Realty players, who are battling slowing sales, were expecting a two percentage points cut in home loan rates to 6-6.5 per cent, priority lending status for loans up to Rs 35 lakh from Rs 20 lakh earlier, increase in rebate on home loan interest from the current Rs 1.5 lakh to Rs 3 lakh, abolition of service tax on sale of units and rentals, reduction in excise duty on steel and cement among others.
Though most of the banks have cut home loan rates, realty experts said the home buyers were still deferring new purchases in anticipation of a drop in the prices and also due to stagnant income, which have led to slower sales. In the December quarter, sales of property companies have fallen by 70-80 per cent, putting pressure on their finances and execution skills.
“Though this was an interim budget, the government could have made an exception and announced some sops for reviving the market, given the adverse conditions in the market. Benefits for housing would have created a ripple effect and helped in giving a positive push to the economy,’’ said Rohtas Goel, chairman of Delhi-based Omaxe.
Both the government and the Reserve Bank of India (RBI) had already announced a slew of measures, including a refinance facility of Rs 4,000 crore available against the National Housing Bank’s loans and advances to the housing finance companies (HFC) at eight per cent for loans up to Rs 20 lakh, and capped interest rates for home loans.
But experts said the earlier stimulus packages have not helped much. “Though the government has come out with a stimulus packages in the past, they were not enough to revive the sector. A lot many things were expected, now the industry has to pass through 5-6 months in the absence of any new incentive in place. Falling interest rates and inflation are only the comforting factor for developers now,’’ said an analyst from Religare Securities.
Though the BSE Realty Index, which tracks realty stocks, touched a high of 1,650 points in the anticipation of sops to the sector, ended the day at 1,519 points, over 4.5 per cent lower, than its Friday close.
Indiabulls Real Estate (IBREL) fell 9.62 per cent, Ansal Infrastructure slipped 6.28 per cent, Orbit Corp was down 6.73 per cent were the major losers in the category.
“Though some government measures should have helped developers, in the long term, property companies should build houses that can be afforded by home buyers. Buyers should buy houses or private equity funds should invest keeping long term perspectives,’’ Subhash Bedi, partner of Red Fort Capital, which runs private equity funds, said.
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