Low-cost housing will lead the recovery process, stresses a FICCI survey
Even as the economy picks up and reports speak of crore-plus apartments being sold within hours, `affordable' is still the operative word in the residential property segment, as indicated by figures in a latest FICCI survey report.
According to the report, `Indian real estate: the current scenario', 34 per cent demand in residential realty lies in the Rs 5 lakh-Rs 15 lakh segment; 26 per cent in the Rs 15 lakh-Rs 25 lakh segment; 22 per cent in the Rs 25 lakh -Rs 40 lakh segment; 12 per cent in the Rs 35 lakh-Rs 50 lakh segment; and only 6 per cent demand is for properties priced above Rs 50 lakh.
Parking funds in affordable housing projects has emerged as the safest bet, says the survey, followed by the development of demand based commercial spaces. Special Economic Zones (SEZs) and the retail segment are expected to be the least preferred asset class to drive the sector towards recovery.
Experts predict a 25-30 per cent renewal in demand in the residential segment by the end of 2009. In contrast, demand in the commercial segment is expected to pick up only after the third quarter of 2010. Till the end of this year, a demand rise of only 10-12 per cent is expected in the retail segment.
Transparency needed
According to the survey, the stimulus packages and interest rate cuts have made it easier for developers to access bank finance.
However, banks are still cautious when it comes to lending and prefer lending to credible developers and for projects that are nearing completion. The developers surveyed feel that transparency in operations could enhance their credibility and bring credit within reach.
While qualified institutional placement (QIP), a process of selective equity issue, has emerged as one of the most popular modes of raising funds in recent times, lack of awareness about real estate mutual funds (REMFs) and the ambiguous policy framework have prevented the funds from really taking off in the Indian market. Issues relating to taxation and exit need to be resolved and the guidelines made clearer for the REMFs to perform better.
Not seeing green
According to the report, the biggest hurdle facing the `green building' concept in India is that of ignorance - about the long-term benefits of such buildings and, as a result, there is resistance to this new practice among builders.
The next major obstacle is the lack of integrated designing and insufficient infrastructure to support green building construction. Bylaws should make it mandatory for developers to adopt sustainable and green methods of development.
Courtesy:- HT Estates dt:- 10-10-2009
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