Realty body seeks funds for stalled projects

Faced with liquidity crunch, realtors' apex body Credaisought one-time restructuring of loans provided to the sector as well as a dedicated fund for the completion of stalled housing projects.It also demanded reduction in the GST rate for under-construction homes at 8 per cent from the current 12 per cent, besides single-window clearance for projects.

These demands were made by the association at its second edition of the New India Summit in Mysore, Karnataka. Over 1,000-member developers and experts from the real estate sector from across the country attended the event. The summit was inaugurated by Union Minister of Skill Development and Entrepreneurship Ananth Kumar Hegde.

"In view of real estate being subject to both GST and stamp duties, there is a case that the rate of GST on real estate, which stands at 12 per cent, needs to be reduced to 8 per cent across all segments and not just for houses of up to 60 square metres," Credai said. The current land abatement rate of 33 per cent is also not adequate in case of metros where land costs up to 70 per cent of the total cost of the unit, it added.

Credai pointed out that lack of implementation of single window clearance in Indian realty space is a major reason for delay in projects. The fast track approval will resolve critical operational issues in the industry and could also reduce real estate prices substantially. On liquidity crunch, Credai said:

"Demonetisation, Real Estate Regulation Act and GST have cast the heavy burden of multiple transitions on the real estate sector. The NBFC crisis has resulted in a liquidity crunch for the Indian real estate sector with even loans that have been sanctioned facing difficulties in disbursement."

It recommended a one-time restructuring of all real estate loans to enable the sector to emerge successfully from the multiple transitions. "Last mile funding for stalled projects through setting up of 'Stressed Assets Reconstruction Fund' for real estate has become a necessity to ensure delivery of housing units to consumers," Credai said.

On the growth potential of emerging cities, Credai President Jaxay Shah said the future of the Indian economy lies in these emerging regions, with Mysore being a testament to this belief owing to its rapid economic growth in the past few years. Credai Chairman Getamber Anand said there is no doubt about the need for new urban centres to take the mantle for India's economic growth from the metro cities and put themselves on the map.

Established in 1999, The Confederation of Real Estate Developers' Association of India is the apex body for private real estate developers in India, representing over 12,000 developers through 23 states and 204 city chapters across the country.