Low-cost flats to boost demand in real estate sector

Industry calls for the real estate regulator to be the nodal agency

 
A survey on current scenario on country’s real estate sector reveals that 34 per cent of demand in residential segment is in the price bracket of Rs 5-15 lakh; 26 per cent in the bracket of Rs 15-25 lakh; 22 per cent in the range of Rs 25-40 lakh; 12 per cent in the range of Rs 35-50 lakh. In luxury house segment with properties costing above Rs 50 lakh the demand level is just six per cent, the Ficci survey shows. Interestingly, the survey reveals that parking funds in affordable housing projects has emerged as safest bet for developers followed by developing demand based commercial spaces. Special Economic Zone (SEZ) and retail segment are expected to be the least preferred asset class to drive the sector towards recovery. Although real estate sector has started to show some signs of revival a majority of the industry experts expect the residential segment to recover by the end of 2009 with a 25-30 per cent renewal in demand. The commercial segment expected to pick up after the third quarter of 2010.

Realotrs believe that retail segment will revive only marginally by end of 2009 by approximately 10-12 per cent rise in demand and will recover only by the last quarter of 2010. Developers now seem to concentrate on high volumes and lower margins as against low volumes and higher margins and have shifted focus towards affordable housing segment, the survey reveals. As per the findings the stimulus packages and interest rate cuts have to an extent eased accessibility for bank finance for the developers. However, banks are still cautious in lending and prefer lending for projects nearing completion to lower risk.  Most respondents feel that there is an urgent need for a real estate regulator (RER) that would not only act as a nodal agency for all real estate developments but also quell the concerns of consumers as well as the real estate industry as a whole.

The Ministry of Urban Development has already floated a Discussion Paper in the public domain on the need for setting up a RER.

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