Land prices will have to fall down to make homes affordable
Q: There is a huge opportunity in the housing segment but to make it affordable it is very necessary to bring down the land prices and the approval of the project faster.
hi friends my opinions about the foreign investors in Indian real estate are positive, it is good for the real estate sector an as well as good for the Indian economical way . Foreign investment in Indian real estate is surely great chance for Indian property sectors to make money.
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The recent budget has increased the limit of deduction of rent paid under section 80GG from Rs. 24,000 to Rs. 60,000 per annum. This would mean that house rental rates will be set to increase. The budget has certainly brought up different changes in the real estate sector. You can read more about them here: https://realtytorealityblog.wordpress.com/2016/02/25/budget-2016-5-things-to-expect-for-real-estate/
Hi Surinder, There is a huge amount of interest in foreign money coming to India. Most of the money has come into various private equity funds. these are funds that serve to the affordable housing segment and funds that serves to larger developers. It is the middle and larger developers who have access to these funds.
Well Chandra, In any market you would see some people under stress. We have not seen any pickup in developer lending, our growth in developer lending has remained in tune with the market. Our individual book is 73% and non-individual is 27%. We have not seen any undue distress for majority of them.
I see a huge opportunity but if you have to make housing affordable, you will have to get land prices down. Second is funding of land. Today, largely private equity investors fund it and the interest rate they charge is huge. 3rd, speed up the process of project clearance. There should be a single-window clearance for approval of projects.
Hi Chandra, The real estate market has certainly had its ups and downs over the course of the past year. Real estate developers saw a lull in demand for housing and investor confidence was dwindling. However, 2016 has started off brightly and has seen an improvement both in developer projects as well as demand. Reputed developers like Mahindra Lifespaces, Oberoi, Raheja etc. are working on exciting new projects all over the city. Things are definitely looking up and the proof can be seen with stunning new projects like Vivante by Mahindra Lifespaces. They definitely doesn’t seem to be any distress currently in the real estate market.
Hi lalit, But we are not seeing developers trying to bring down prices in Mumbai. In a way prices have come down that indicates that we are paying the same as we were paying two yrs back.
Hi Visal, You are right. In reality, due to inflation, there has been a time correction. The average loan amount used to go up by 10-12% a year, now the average loan amount increase is 5-6%. It is reflective of the increase in income and not reflective of increase in property prices.