Wednesday, 25 December 2013

Breather for Real Estate Industry at last of 2013: Gaurav Gupta, Director, SG Estates Ltd.

2013 has been a tough year for Real Estate Industry at large which not only saw falling demand due to negative economic sentiment and high rate of interest but also saw passage of land acquisition bill and draft formulation of real estate regulatory bill. The intent of both the bills is good but some provisions need to b modified like in LARR, private sector should be kept out from its ambit as deals are done at market rates and in Real Estate Regulatory bill, sanctioning authorities should also come in its purview, so to make them accountable for delays, if any. Only then the intent of bill will truly be achieved.
Housing loan rate of interest plays a major role in determining the demand in real estate sector and with continuous increases, it had created havoc. With inflation at its peak, industry was expecting another hike from RBI side in its December 2013 monetary review policy but Honorable Governor of RBI, Shri Raghuram Govind Rajan surprised the industry by keeping the rates un changed. This has sent a very positive signal to the industry at large and banks like HDFC, SBI, ICICI immediately responded by lowering the rate of interest. This has also sent a signal to the home buyers that probably the era of increasing rates has come to an end and the journey forward will see the downward movement of the rate of interest, provided of course that inflation remains in control. Rate of interest not only brings down the EMI but also increases the eligibility of the perspective home buyer.
Also SEBI is moving forward in bringing the Real Estate Investment Trusts, popularly known as REITs in reality. This will bring the much required liquidity in the commercial Real Estate Sector.
We hope that this trend of positive news continues to bring cheer to the real estate industry and keep the growth going. If Real Estate grows, so does the economy as real estate supports around 300 ancillary industries and is the second largest employer in India after the agriculture. 

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