Real Estate Sector Seeks Govt Help

December 18, 2008	(1 votes, average: 5 out of 5)  Loading ...
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Real estate prices in India are plunging, projects are failing to take off and the industry is reeling under a severe liquidity crunch, a lobby group fishing for incentives told a top policy maker on Wednesday. “Transactions are down 80 percent, prices are on downward trend everywhere, new projects are not starting, current projects may stall all over the country,” the National Real Estate Development Council (NAREDCO) said in a presentation to Planning Commission Deputy Chairman Montek Singh Ahluwalia. “Banks are not lending, (there is a) severe liquidity crunch … slowdowm is real,” the council told Ahluwalia in a meeting attended by top officials of DLF, Parsvnath Developers and Omaxe.

“Different departments of government will see what can be done,” Ahluwalia said after the meeting, without elaborating. The government has cut interest rates, launched a $4 billion spending package and cut a tax on manufactured goods to boost flagging demand in Asia’s third-largest economy. Last week, Trade Minister Kamal Nath said the government would consider a second stimulus package for industry. Indian property prices are widely seen as inflated and demand has fallen as tight liquidity made loans dearer. The Reserve Bank of India on Wednesday said anecdotal evidence indicated real estate prices had gained two to four times in the last three to four years, but had softened in some parts of the country in the wake of a slowing economy.

The souring environment for the industry has hammered down the real estate index by 83 percent since January against a 52 percent fall of the broader index. To boost demand, state-run banks, prompted by the government on Monday cut interest rates for home loans up to 2 million rupees, but there are few properties available at those prices. Analysts have said the property market would not revive till prices came down, something that developers on Wednesday said was not feasible. There is no further scope to cut prices,.” Parsvnath Chairman Pradeep Jain said after the meeting, as some prices had already come down by up to a fifth. Jain estimated 1.5 million houses remained unsold with developers across the country.

News Published Under:   Property Prices |

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