Bangalore: Last year, the real estate market
had been through many ups and downs, which in turn has brought
discouragement for the realty industry. To revive the market growth, the
real estate industry expects certain changes and provisions from the
Union Budget 2013-14.
1) Lower lending rates:
In the present market scenario, banks have imposed high rates of borrowing for developers and home buyers which in turn has slowed down the home sales. The real estate industry is hoping that the interest rates will be reduced in the upcoming Union Budget. However, the base rate reduction is essential to help banks reduce their borrowing rates. The government needs to concentrate on these particular issues in the budget which should be followed through the Reserve Bank of India (RBI) in terms of lessening the repo rates and other policies like CRR, SLR and so on to improve the flow of economy in the sector that in turn will help real estate sector to flourish.
Besides, authority bodies like regulatory and monetary authorities should reduce the home loan rates in order to provide housing under affordable option in more number of cities and towns. This measure will mainly help home buyers under lower income groups.
2) Consideration of Special Residential Zones:
Last year, Indian cities face shortage of 18.8 million homes and to improve the condition, the government needs to make provisions for Special Residential Zones (SRZs) to provide more housing stock in targeted locations.
3) Realty sector should get industry status:
The real estate industry in India contributes around 5 percent to the overall GDP. Over the last decades, the sector has witnessed significant growth in terms of business standards and quality. However, the realty sector has been facing challenges because of less regulations and ineffective policies. But, as a part of the reform agenda, the government is all set to give real estate sector an industry status after a long wait. With this government’s measure, the sector can access cheaper funds from banks. In this budget session, the sector is hoping that the long wait for industry status should come to an end.
4) Provisions for subsidized construction materials:
The construction prices are heading north and it has increased over 50 percent alone in the past two years. Besides, the rising input costs have landed developers in cash crunch situation and they are facing challenge in project completion. Not only there is a hike in construction charges but the increase in external and internal development charges, license charges and usage of land charges from various departments. This in turn is increasing the real estate prices across the country. So, there should be provisions for subsidized construction materials for budget housing in the budget.
5) Enable the Real Estate Regulatory Bill:
The government is expected to come up with the real estate Regulatory Bill in the upcoming Budget session of the Parliament in order to regulate the real estate sector. This bill needs to come into effect as soon as possible because government has been pushing this bill since 2009. The aim of this regulatory bill is to establish a regulatory authority to impose transparency and fair practice in realty transactions.
6) Clarity in land titles:
The budget should also provide better clarity in land titles. There is less transparency in land ownership across the country and government needs to undertake certain measures to provide better clearance as the lack of clarity on land titles hindering the overall growth of the sector as well as lowering confidence for investors.
7) Manage finance in the sector:
While the real estate sector is not coming under the hood of any particular regulatory authority, the flow of liquidity has become an issue for the sector. The developers are also struggling with their projects due to lack of funds, resulting in project delays. The liberalization of finance is the most significant thing the sector is in need of. The budget 2013-14 should provide scope for external commercial borrowings for the sector and should lessen the financing norms.
Original source : siliconindia.com
