Confederation of Real Estate Developers’ Association of India (CREDAI), an apex body of the organised real estate developers, has estimated a funding gap to the tune of $ 70 billion in the sector in the next five years.
CREDAI president Mr Lalit Kumar Jain said such a situation might create hurdles for the industry to grow if the Reserve Bank of India is not “proactive“.
“The housing that is required in the current five-year plan is 24.6 million and now it is 37 million in the next five year plan. We require $ 3.2 trillion (to meet the target).
Funding gap in housing will be around $ 70 billion in the next five years. The $ 70 billion is among the current developers only,” Mr Jain told PTI.
He was speaking ahead of the third edition of National Association of Realtors (NAR) — India Convention 2011, a two-day convention and exposition set to begin here on Sunday.
“Foreign investments do not solve the problem. They are very costly and cannot be affordable. There has to be generation of funds internally and RBI has to be proactive on this issue,” Mr Jain added.
He said any FDI into the country would expect a return on investment of 30 per cent, which is not possible in real estate projects, and hence not advisable.
The RBI allows real estate companies to tap External Commercial Borrowings (ECBs) for only township projects in minimum 100 acres of land, Mr Jain said, adding small players cannot go for ECBs.