The Hindu Business Line : `Real estate prices may not see radical correction'

Mumbai May 14 There may be no respite yet from soaring apartment prices. Real estate prices are not likely to see a radical correction, said Mr S.K. Mitter, Director and Chief Executive, LIC Housing Finance Ltd.

"Demand continues to outstrip supply in major metros-Mumbai, Delhi and the National Capital Region. According to the National Housing Bank, there is a shortage of 26 million dwelling units," he elaborated.

He said there may not be a slow-down in the offtake of home loans. "While people may defer the decision to take home loans, they may still want to buy a house rather than take up rented accommodation. The strength of the housing market is tremendous," he said.

With the jump in the number of information technology parks in Tier-III cities, the growth in home loans from this sector has been significant. Mr Mitter said 48 per cent of the loans in LIC Housing Finance's portfolio came from Tier-III cities such as Jaipur, Jodhpur, Bhubhaneshwar, Lucknow. Tier I and II cities contributed 26 per cent each to the loan portfolio.

AMC stake

He said LIC Housing Finance was looking at picking up a stake in an asset reconstruction company. "The company could either be an existing or a new one. The stake could be up to 20 per cent depending on the size of the company," he said.

"We would like to gain experience in the business of recovery, which could eventually be an added source of income," he added.

Realty funds

LIC Housing Finance will also lift its exposure in realty funds. The company has so far invested in Rs 50 crore in Kotak Mahindra India Real Estate Fund and Rs 10 crore in Unitech CIG Fund.

It may also look at setting up a realty fund with LIC, banks and other venture funds.

LIC Housing Finance has signed an agreement with Warba Insurance company in Kuwait to tap the non-resident Indians. The company already has operations in Dubai. "While the loans are sold overseas, the assets are built in India. The borrowers so far are mainly from Kerala, Tamil Nadu and Andhra Pradesh," he said.

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