Selasa, 01/09/2009

Banks Urge Indian Developers to Control Property Prices

-jktproperty.com
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Banks Urge Indian Developers to Control Property Prices

THE INDIAN REAL ESTATE market has become active again. Accordingly, developers are now enthusiastic and stop giving price discounts and raise property prices in response to rising demand. However, banks in India have urged developers to stop increasing property prices as they are worried that doing so will slow the pace of getting India out of the current crisis.

Confederation of Real Estate Developer’s Association of India, which is represented by Kumar Gera as association chairman, confirmed that property prices in some sectors have increased. But, the price hike is not that significant when compared with last year’s top margin of price increases.

Gera estimates that property prices will decline by up to 25-30 percent, but in the coming months they will hike 10-15 percent. Current prices are so varying. Unitech has increased its prices 2 percent for its Gurgaon project, while Lodha Group has raised its prices 10-15 percent. Group Director Abhischeck Lodha said, “We have marginally increased prices every month for these projects since their launch. But the market is in a good spot and the response is till good.”

Meanwhile, a Bangalore-based property company, Brigade Enterprises that cut its property prices 15 percent in April, has just increased them 3-5 percent, and is planning to raise them further. Enthusiasms among developers to raise prices worry banks. It is predicted that many developers will increase their prices merely to fill their purses while not being clear about the reason why they do so and its consequences.

Their enthusiasms are viewed as slowing down India’s recovery from the current crisis. S. Sridhar, Chairman and Managing Director of the Central Bank of India, said that the steps taken by developers who have aggressively raised their property prices in hopes of witnessing an immediate awakening of the property market are a naïve move.

Raising property prices not automatically pushes demand up. There are worries that significant price hikes will affect prospective buyers notably middle-class people. Like laboratory equipment Also disagreeing is Aditi Vijayakar, Residential Executive Director at Property Consultant Cushman and Wakefield. He said, “Right now it is a fairly confused market. Rates have more or less bottomed out but there needs to be substantial amount of sales before buyers are convinced price increases are justified. I think the real estate market will be flat for some time.”

Make Clear Regulating Body Developers in India could feel proud of the recovery signals and the positive expectations on the country’s property market this year. Sales volumes are estimated to hike. But, they normally go in accordance with sales disputes that have to be settled.

Accordingly, property business players, especially those from the real estate subsector, have demanded the national regulating body for property business to be more transparent and be capable to settle problems now facing them.

“There is a need for an efficient and focused regulatory body to overlook the functioning of the real estate sector in order to insure the future development of the industry and safeguard consumer interests in line with international benchmarks,” said Assocham, a real estate executive.

The existence of the regulatory body is crucial for handling consumer complaints since it has authority over the development of property projects and without delay supervises real estate agents and financial institutions. That body functions to safeguard and protect consumer interests in order to maintain market growth and ensure that India’s recovery from the current crisis is proceeding on track. Input also comes from CREDAI, which views that in the future the growth of the Indian property industry will be much determined by middle and low class consumers who form the majority of the country’s population.

As such, CREDAI sees the importance of providing residential estates reachable to them. This also means an improvement of slum areas. According to CREDAI, reaching middle class buyers will contribute 1-1.5 percent to India’s gross domestic product. The government is also advised to provide fiscal incentives so as to encourage people to buy property assets measuring 300-600 sq. feet and 1,000 sq. feet. It is estimated that India still needs around 24.7 million units of houses for low-class earners.

Santosh President Kumar Rungta said, “We appeal to the government to create an impetus and facilitate affordable housing. Property ownership is critical for this segment not only for economic reasons but also for the health of the nation from a social perspective in terms of stability, law and order, education and employment.”

The government also needs to implement direct and indirect taxation in order to ensure that in five years’ time India will be free of slum areas. Real estate entrepreneurs also suggest that senior citizens be given incentives for buying houses, and children be given incentives for buying houses for their parents who are above 55 years old. All parties view that now is the time for proving the professionalism of the Indian property industry. The property sector should officially be treated as a typical industry so that it can have easy access to bank credits. (JR)