Indiareit Fund Advisors
1. What is your wish list for forthcoming Budget?
The past few Budgets have not seen much by way of announcements directly benefiting the real estate sector. Our ‘wishlist’ for the forthcoming budget would include:
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2. How do you see overall industry outlook going into FY14? And is there something specific you can share about your sector here?
- Granting ‘infrastructure’ status to real estate; which in turn would directly enhance the availability of funding under the FDI, External Commercial Borrowing and Domestic Bank Lending routes
- Granting ‘industry’ status to real estate in recognition of the contribution of real estate to the GDP; and as above, formulate effective policies to provide more adequate sources of finance be it bank debt at reduced rates and collateral values or a broader scope for external commercial borrowings
- Reduce cost of borrowing for end user; a reduction in the base rate is necessary to help banks lower lending rates; any budgetary measures should also be mirrored by the RBI in terms of easing repo rates and relaxing other policy instruments such as CRR, SLR to improve liquidity
- Implement ‘REIT’ guidelines; this would bring much needed liquidity to the commercial market and also enable both foreign and domestic retail investors to access real estate as an asset class on a unit by unit basis with an appropriate open market exit mechanism
- Stem rise in input costs; construction costs have increased multifold in recent years and developers are grappling with cost overruns despite slowing sales
We see 2014 as being a turning point for the real estate industry. Whilst some sectors and markets have suffered on account of lack of liquidity, slowdown in sales and delays in projects, there are specific pockets of opportunity for capital providers like ourselves. We are subjecting ourselves to an extremely rigorous underwriting discipline in identifying new investment opportunities. Government Policy intervention is required, however, to put the industry as a whole back on the growth trajectory. Our sector (private equity) plays the role of ‘enabling growth’ in real estate and coherent measures to enhance the overall liquidity in the system; rationalize the sanction and approval process and facilitate end user demand would only help the industry and all the representative participants, be it end users, developers, investors, banks, and private equity funds.