Naredco will urge new government to provide benefits for sectors revival

I have high expectations from the new government. I expect the new government will provide relief to this sector. One,we hope that the government will grant infrastructure status to residential units having an area of 900 sq ft or less. Projects having at least 100 such units should be accorded this status.

Two,the completion date of projects,which have already been approved under Section 80IB (10),should be extended for another two years.

Three,in order to promote affordable housing,where supply is negligible and demand high,concessions under Section 80IB (10),as available before 2007,should be reintroduced.

Four,the government should create a dedicated fund for affordable housing. Access to long-term funds such as provident,insurance and pension funds will also ease the real estate sectors current problems.

And five,the deduction on account of interest payment available under Section 24 should be made applicable from the year in which capital was borrowed as for the principal under Section 80C,and should be to the extent of full interest paid. Alternatively,the current limit of Rs 1.5 lakh should be raised to Rs 3 lakh for owner-occupied houses. Also,the three-year limit for acquisition or completion from the year of borrowing should be dispensed with.

These concessions will provide much-needed impetus to the housing sector that has been affected by the global turmoil.

•How can the real estate market be revived in the current circumstances?

The real estate sector is already showing signs of recovery. We expect that the new government will provide further relief to the real estate sector that has the potential to boost economic growth and create job opportunities.

If economic conditions improve and the stock markets stabilise,so that customers have more disposable income,it would improve the prospects of the real estate sector. We are also hopeful that banks will provide relief to potential buyers in the form of lower loan rates.

We expect that government should promote affordable housing in a more aggressive way. Only then will the affordability of housing improve. We expect the government to create special funds and develop special corridors where affordable housing can be developed. Easy clearance should be provided to these affordable-housing projects. All these initiatives will help attract more buyers to the real estate sector.

•In current scenario when most of the top developers are under heavy debts,what options do they have for restructuring their debts and getting hold of more funds for completing their projects?

Several viable routes for raising money exist for developers. These include Qualified Institutional Placements (QIPs),American Depository Receipts (ADRs),Global Depository Receipts (GDRs),and Foreign Currency Convertible Bonds (FCCBs). A vibrant onshore private placement equity market has developed.

•Dont you think that developers are loosening their grip by selling off stakes through the QIP route and to private equity players?

QIP offers a good option for raising funds from the domestic market within a short span of time. It requires fewer formalities than an IPO and is also more cost efficient. Moreover,it offers an opportunity to buy non-locking shares and is an easy mechanism if corporate governance and other required parameters are in place. For those cash-deprived developers who are facing a financial crunch and need quick money,this route offers one bailout option. Developers weigh the pros and cons of these options before taking any step.

•What measures is Naredco contemplating to facilitate the revival of this sector?

As the nodal agency for housing and real estate sector in India,Naredco acts as a mediator between the government,developers and consumers. Naredco has always communicated the demands of consumers to the government. It recently urged all its members to offer discounts on their upcoming and existing projects in order to boost demand and combat the slowdown.

•How is Omaxe faring in the current slowdown?

Due to the global turmoil and the ongoing slowdown in the real estate sector,Omaxe has also taken a hit. But with the market reviving from the last quarter,we are also looking forward to increasing our customer base with our upcoming affordable housing projects. These affordable housing projects will come up all across India. These projects will not only meet the demand of the middle- to low-income group but will also help the company reach out to the masses.

In line with our promise of timely delivery,we are delivering all our projects on time.

With market conditions improving since the last quarter,we have recently launched Omaxe Eternity in Vrindavan and Panache Homes in Greater Noida,Faridabad and Ludhiana. We recently allotted plots to buyers in PDA-Omaxe City,Patiala. We have received an overwhelming response for the second phase of PDA Omaxe City,Patiala. We received 811 applications for 217 plots.