Realty sector heading into best of times, focus on execution, Deepak Parekh tells developers

Realty sector heading into best of times, focus on execution, Deepak Parekh tells developers


Housing affordability, liquidity conditions led by record-low interest rates and the desire among prospective homebuyers have never been at the levels being witnessed at present across India and the property sector stakeholders need to make the best of this, said Deepak Parekh, Chairman of the country’s largest private mortgage lender, Housing Development Finance Corporation (HDFC).

“Right now, there is a lot of optimism in the air on the potential of the housing and real estate sector. This isn’t just feel-good talk, it is real. The Indian real estate market is on the cusp of a new growth cycle and it is important that we make the best of it,” he said.

According to Parekh, he has not seen this kind of scenario in over 50 years of his work life. However, he also advised them to tread with caution, focus on execution and avoid repeating mistakes such as over-leveraging.

“The most fatal financial mistakes always happen in good times, simply because as I never tire of saying, leverage is a double-edged sword. Leverage amplifies profits in good times, but it kills during a downturn,” Parekh said while highlighting China’s over built, over leveraged property sector and the fall out of Evergrande and some others.

He was speaking at a conference organized by realty developers’ body CREDAI.

India, according to him, does not have housing bubble troubles at present as the inherent housing demand remains immense and concerted efforts have been made to ensure supply at the right price points to meet the needs of various income groups.

Parekh attributed the same to central and state governments’ efforts to focus on enabling policies for the housing sector including continued fiscal incentives, the Pradhan Mantri Awas Yojana (PMAY), Credit Linked Subsidy Scheme (CLSS), concessional stamp duties, premium reductions, etc. In addition to these, the RBI’s accommodative monetary policy and comfortable liquidity conditions has also helped significantly.

He hopes the government will consider a CLSS version 2.0, as it has been amongst the best executed and impactful government schemes. While the upfront subsidy for the economically weaker sections and low-income group runs till March 31, 2022, the subsidy for the middle-income groups who also need a helping hand whilst purchasing their first home is no longer available and needs to be reconsidered at.

Given the high demand for affordable housing both financiers and developers need to continue their focus on this segment. The recent launch pipeline, apart from the sales velocity, is the mark of business confidence, he said while adding that low interest rates cannot last forever as higher inflation would set in if the energy prices continue to rise and trigger a change in monetary policy.

The input prices, especially commodity prices have moved up and Parekh believes if the supply bottlenecks are not unwound soon, it could be a dampener.

“A calibrated increase in property prices can be easily absorbed, the sharp shocks can’t,” he said.

Armed with higher incomes and increasing aspirations, the Indian mortgage finance sector, according to him, also will change significantly with younger home borrowers compared to what India has experienced in the past.

Parekh also advised realty developers’ associations like CREDAI and NAREDCO to come together as that will allow them more power to raise their issues with the authorities more effectively.



Source link

Add a Comment

Your email address will not be published.