After affordable housing, very soon entire real estate will get industry status and it will be game changer.
Central govt. is planning to assign industry status to real estate during winter session. After implementation of RERA (Real Estate Regulatory Authority), this is one of the long pending demands of real estate sector for ease of doing business.
Govt. was focusing on supply of affordable units in the country to ensure housing for all. Hence they made affordable category part of industry instead of considering entire sector. But now govt. has plans to award industry status to real estate sector. This will help developers to get easy fund and finish projects without delay.
Industry status to real estate will make many things easy for developers and finance for projects is top of that. Due to lack of regulation and industry status, banks were not willing to finance housing projects. So developers used to borrow at high interest rates, bring in joint partner and manage funds from other sources.
So developers always used to be in immense pressure to pay higher interest or assured return that used to be fatal for projects. This used to lead to disputes and unwanted delay in project construction. Most of the stuck housing projects are seeking funds to complete projects but in present scenario no one is willing to invest.
Hari Om Dixit- Director, Gayatri Group says, “Scarcity of funds is an open truth in real estate sector. Be it small or big, lack of funds is forcing developers to default on multiple fronts; investor, home buyers, authority and creditors, since they don’t have any other option. I personally feel that refinancing to those who are still willing to deliver project honestly will get benefit due to industry status to real estate. They will be able to manage debts and revive construction in stalled projects up to delivery.”
Of course industry status will help developers to get funds at normal rate like any other industry. Developers will be less dependent on external source of funds and so on will focus on completion of projects rather than managing funds on regular intervals. Beyond that, timely construction and delivery will attract home buyers too who are away due to infinite delay in projects.
Dinesh Jain- MD, Exotica Housing says, “I welcome this initiative of government. Industry status to realty sector will be boon for sector. Banks and financial institutions were reluctant to provide funds to real estate developers and projects in the absence of industry status. But after industry status developers will get hassle free loans and that too on subsidized rates like any other industries. Easy finance will save many projects from unnecessary delays due to shortage of funds. I urge govt. to introduce single window system to save time in project approvals to reduce the cost of real estate projects.”
Real estate sector is largest contributor in GDP of the country. Real estate sector creates large no of employment for skilled, semi skilled and non skilled people, directly and indirectly both. More than hundred allied sectors are excelled due to real estate be it small or medium or big. Slow down in real estate affects overall economy.
Iftikhar Ahmad- Director, Nirala India shares his views, “industry status will make developers eligible to get financial credit for project which is need of the hour. Since past couple of years developers were demanding industry status to generate funds for existing and upcoming projects. Overall this will revive status of real estate sector that is capable to boost GDP of India. Funds at lower rates will bring down construction cost and benefit will transferred to home buyers who is price savvy now. Real estate will achieve a milestone after industry status and market will have more responsible developers.”
Recently govt. has provided Rs. 25,000 cr to real estate to complete 1600 stuck housing projects having 4.58 lakh units. This is a huge boost for sector when shortage of fund is affecting delivery of projects. Industry status to real estate will be another booster for the sector and the economy as well.