Real Estate Industry Bailout

Rohtas Goel, CMD, Omaxe, said unsold property to the tune of Rs 20,00­0–25,000 crore remains stuck in the country. On the new interest rate regime, Goel said his company was not catering to the under-Rs 20 Lakhs category but added that it could start catering to the segment. “So we will not get any benefit out of this package which has come right now.” He added, “to promote the housing sector and to promote the affordable housing sector, we expected a little more from the government. The rate of interest for loans up to Rs 5 Lakhs should have been at 6.5%. The rate of interest up to Rs 30 Lakhs — and not up to Rs 20 Lakhs (as is currently given) — should be around 7.5%." Goel added that even as many developers were increasingly looking to focus on affordable housing, what happens to the existing projects that are stick now remains to be seen. “To bail out those projects, we need loans up to Rs 30 Lakhs come at a single-digit interest rate.”

Pradeep Jain, Chairman, Parsvnath Developers Ltd, echoed Goel’s views. “The bankers not charging any processing fee for loans up to Rs 5 Lakhs and minimum fee for up to Rs 20 Lakhs is a very welcome move,” he said, adding, “But even the current interest rate regime of 8.5% and 9.25% for the two brackets is too high. The industry was expecting an interest rate of about 6% for loans up to Rs 5 Lakhs.” Jain added that the Rs 5–Rs 20 Lakhs segment should be extended to Rs 30 Lakhs at the upper end. “At the same time, the government also needs to re-look at the interest rates beyond Rs 30 Lakhs. The rate of interest there needs to be cut to single digit,” he said.