The Hindu Business Line : FICCI moots 8-point agenda to boost housing demand

With the global liquidity crisis and investors dumping realty stocks, the market capitalisation of 14 listed Indian real estate companies saw a year-on-year erosion of over 80 per cent, as on December 3.

A survey conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI) shows that the real estate companies that saw an erosion in market capitalisation include DLF, Unitech, HDIL, Omaxe, Parsvnath Developers, and Sobha Developers.

The survey, ‘Impact of Global Financial Crisis on Indian real estate market’, also pointed out that the sector faced severe liquidity crunch in the aftermath of the financial meltdown in the US and suggested various measures to boost flagging demand and increase flow of foreign capital.

“The second quarter year-on-year net profit of some listed real estate companies have fallen sharply in the range of 4 per cent in case of DLF to as high as 79 per cent in case of Parsvnath Developers,” it said.

Correction in offing

Commercial and residential real estate prices are in for a sharp correction in the short to medium term, FICCI said, adding that the focus would now shift to mid-range and affordable housing.

Outlining an eight-point agenda for the sector, the chamber recommended that adequate and cheap long-term finance should be made available to the industry. “The Government should lower the interest rates, thereby making home loans cheaper, to boost demand for residential properties and make them affordable to masses,” the survey said.

It further mooted simplification of legal framework for holding land in India, and suggested a single window approval to cut down on project delays.

Emphasising on land reforms by way of making land records transparent through computerisation, FICCI said the move would improve efficiency and reduce chances of fraud. It also called for special incentives such as reducing VAT and stamp duties and tax benefits for developers undertaking affordable and low cost housing projects.

The chamber said that the recent interest cuts should have been deeper to give the necessary push for affordable housing. Besides this, the upper limit of the special package for home loans of up to Rs 20 lakh, announced by pubic sector banks recently, should be increased to Rs 30 lakh, it added.

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