| Source: CNBC-TV18

Parsvnath expects real estate prices to rise post Land Bill

Pradeep Jain of Parsvnath Developers believes their company will not be affected by the RBI's move of restricting banks to pay home loans with 80:20 scheme.

Parsvnath Developers will not be affected by the Reserve Bank of India's directive on the 80:20 housing scheme, says chairman Pradeep Jain, according to which, banks have been restricted from providing upfront housing loans for under-construction projects.

Speaking to CNBC-TV18, he says, the passing of Land Acquisition Bill will increase the real estate prices. "The extra money that developer will have to pay to the farmers will be passed on to the consumer as an infrastructure charge or whatever be the government charge from the consumer through the developer," he adds.

Below is the verbatim transcript of Pradeep Jain's interview on CNBC-TV18

Q: What is your reaction to the 80:20 scheme and for Parsvnath in particular, how many of your projects did have 80:20 prevalent as an option for a buyer?

A: The 80:20 scheme where the RBI restricted to the financial institution housing finance company to land to the consumer. Few of the developers are coming out with the scheme that 20 percent contributed by the consumer and 80 percent upfront paid by the consumer through the financial institution.

The RBI’s concern is, that money needs to be paid as along the construction and is a welcome step because the upfront money to be taken by the developer and the EMI start and the subvention is the good scheme.

We came out with the scheme of 25:75 a couple of months back and it got a good response, we have done large bookings into that scheme but our scheme was not a subvention scheme. Around 25 percent upfront paid by the consumer and 75 percent required by the consumer to be paid at the time of offer of possession.

In between there is no financial institution involved or there is no agreement among the developer, the consumer and the financial institution. Our scheme is not affected under the RBI’s recent guidelines.

Q: What is happening to the real estate prices because some of the experts tell us that there has been a bit of a softening of prices especially in the NCR region over the last month or so?

A: Prices depends on location to location. The correction in prices is not the same within the city of Delhi where the government increase circle rate substantially because of which, in the local colonies not the developer projects, the prices are softened a bit. But if you talk about the Gurgaon or the other part of the NCR, the prices are stable.

The demand is little slow but there are consumers in the market to buy and the investor is little away because he has already committed here and there. Recently the Parliament passed the land bill and the fuel price keeps going up, the real estate price is bound to go up.

Under the Land Acquisition Bill, all the local authorities will need to pay multiple value of the land to the farmer and all that money will be imposed to the developer and developer has no option than to pass on to the consumer as an infrastructure charge or whatever be the government charge from the consumer through the developer.

Q: For your company in particular, what are the projects that are on stream at this point and what are sales looking like?

A: In Delhi NCR, we have a couple of projects. We are developing the project in civil lines, the project is going on fast track for completion. Yesterday only we launched one of the premium office buildings in Connaught place on KG Marg.

The construction will start on September 11 and will be completed in next two years. Few days ago, we paid around Rs 500 crore to government of India through the railway ministry, with that we together paid about Rs 1,160 crore. Our Gaziabad, Greater Noida and Gurgaon projects are on track and will be completed on time.

Q: Any plans to launch any new projects?

A: We are planning to launch new project. We are waiting to get the license from the government of Haryana. In Gurgaon, on Sohna Road we have one land of more than 100 acre originally planned to set up an SEZ, we de-notified that SEZ, land fall into the residential, we applied to the state government to get the license and are expecting the license soon for that township and then we will launch it soon.

Q: How are commercial real estate prices looking at this point?

A: Commercial real estate depends on location like in Delhi, there is a huge shortage of the commercial space. Recently, we launched one of our office buildings for leasing on Bhai Vir Singh Marg, we start leasing with Rs 325 per sq ft, we lease to the AAA+ rated company and that property put together is about Rs 240,000 sq ft.

In the other metro our properties, the rentals increased about 30 percent in last one and a half years but if we talk about Gurgaon or Noida, the prices are stable, it is not increasing because the supply is a bit more into these areas and the sale side, the consumer is very selective to buy the commercial property either the self user or the investor both.

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