The financial world may be facing uncertain times, much speculation could be going on over the rise and fall of real estate prices, but one fact cannot be ignored - land and property continue to be hot investment favourites.With banks decreasing their interest rates marginally on home loans and the real estate developers yet to oblige the appeals made by the former finance minister P Chidambaram (now home minister),NAREDCO and CREDAI to cut prices, a stalemate seems inevitable. Under the current scenario, consumers (home seekers) are in a fix.Several realty experts opine that the present reduction in the home loan interest rates is not enough to boost sales. It has to be matched with a correction in prices and rational pricing.The move by the finance ministry and the Reserve Bank of India (RBI) to beat the slowdown and boost demand in real estate sector does not seem have borne any fruit, thus far.The much-hyped cut in interest rate in home loan has not created any loan rush - for one single reason - it was inadequate. "It's too less.

Buying a house is still not affordable. Like inflation, rate of interest also should be brought down to the single digit level," says Sunit Haldar, a resident of Mayur Vihar who is looking for a flat to accommodate his growing family. The home-seeker takes a decision of buying a house, usually once in a lifetime. He thinks a hundred times before committing to a long-term liability of loan repayment, before approaching the bank, or negotiating with the developer. He knows his math better than anyone else. For him the real push to go for the flat would be if it were within his affordable bracket. But, in the case of recent rate cut, the reduction was lacklustre.For example, the EMI for the loan amount of Rs 20 lakh for a 15-year-tenure at the earlier rate of interest of say 13.5% was around Rs 26,000. If the rate of interest is reduced by only 0.75% to the level of 12.75%, then the effective EMI would be around Rs 25,000. The recent reduction in rate of interest by 0.75% would reduce the monthly burden only by Rs 1,000. Now consider the same case from a different angle. If EMI is Rs 26,000, the monthly income of this person would have to be a t least Rs 60,000 to Rs 70,000. Will reduction of Rs 1,000 matter to this person? Will he be rushing to raise a loan to save just Rs 1,000? Thus, one could not see a rush at the home loan counters as a result of banks lowering the interest rates.

"High interest rates are choking the demand" turned out to be a weak argument as lower rates did not trigger any demand from the home seekers. RBI could pump in the liquidity but the affordability couldn't be increased. Initiatives fell flat in pushing the home seekers to the site as they are still sitting on the fence, with no home, worth the value, in sight.As far as developers are concerned, they have relented to the appeals of Chidambaram. National Real Estate Development Council (NAREDCO) and Confederation of Real Estate Developers Association of India (CREDAI) have asked their member developers to cut the prices in the range of 5% to 10%.Rohtas Goel, chairman of NAREDCO, says that price cuts will help escalate real estate demand and reduce the burden on customers. According to Kumar Gera, chairman, CREDAI: " We are advising the members across the country to make every effort in lowering prices to the levels possible.This will have a desirable impact and cascading effect on employment in the industry, as well as on more than 170 other industries. It will also have a telling impact on the economy and country as a whole." 

Addressing corporate heads and business leaders at the India Economic Summit in Delhi (organized by the World Economic Forum and the Confederation of Indian Industries), PChidambaram said: " Hotels must cut tariffs, airlines must cut prices, real estate must cut rates of apartments and homes they sell, car makers and two wheeler makers must cut prices." But the real estate developers have their own view. They say this won't work until lending rates are also slashed. Whatever correction was to happen has already taken place. Today there is no cushion or margin for developers to further reduce prices."We have already cut prices, which has brought our margin down to 15% from 30% last year.If we cut prices further,our margin will get wiped out," said Emaar MGF, MD, Shravan Gupta."Prices are a function of demand and supply. Today supply is far ahead of demand," says DLF chairman K P Singh. A Unitech spokesperson said price cut was a "good idea". The group has launched a number of affordable housing projects in NCR. Parsvnath Developers' chairman Pradeep Jain says price cut is unlikely even though builders may focus on smaller size homes to bring down overall cost.

The global liquidity crunch has caught up with people who plan and design our buildings. Members with the Indian Institute of Architects (IIA) say business volumes for the industry have slumped between 50 and 80 per cent compared to the year-ago period with new construction projects coming to a full stop and on-going ones slowing down. While volumes in the industrial segment are down about 50 per cent, architecture firms with exposure to the real-estate segment are the worst hit with business volumes nose diving 80 per cent, says Mr Naresh Narasimhan, an architect.

The real estate industry, he says, is going through a “de-leveraging” process and it could take at least three quarters before things start looking up. In terms of built up spaces, the real-estate industry cashed in on a great demand cycle for the past six years. Bengaluru, Gurgaon, Pune and Hyderabad led this demand drive, vice-president of IIA, Mr Pandurang Potnis says: “The construction speed in the last six months is now down about 50 per cent. The demand for construction of new hotels and apartments are down 25 per cent sequentially.” The response of architecture firms to the crisis is not any different from what the rest of the industry has been following. They have been cutting down the expense fat, improving service levels with existing clients while rationalising systems and processes.

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With the rupee depreciation with the dollar, Omaxe and other property developers in India plan to target the NRI buyers. NRIs can get a good deal now because of the recent depreciation of the rupees against the dollar. This would benefit NRI purchase around 20 percent. Property investment in India at this time could be a good deal. Prices have declined by 15 to 20 percent in last few weeks. The Omaxe Real Estate Developer, one of the leading companies in this field is offering NRI property investment like multiplex, shopping complex to 2BHK apartments in Bangalore, Pune, Calcutta, Chennai, Hyderabad and already sky high Mumbai and Delhi.

It is one of the top real estate developers which has a lot of experience and is committed to achieving excellence. They also have a separate interface for Non resident Indians (NRIs). Other features the company offers are: email-based subscription for newly launched projects. This keeps the readers up-to-date with the latest news regarding the real estate infrastructure and current sales in their specified city based on their budget-based selection and choice of accommodation/housing. Omaxe India Ltd claims to be the first ISO 9001 certified company in northern India, which develops real estate in Northern, Central and Southern India.

As their line says, ‘Turning dreams to reality’, the company does the same with their state of art designs which are similar to the international standards. The company hosts experts in the field who give their best to all their projects. Over a period of time Omaxe have executed a number of high profile projects for multinational clients. NRIs have played a very important role in transforming the Indian real estate market. Opening-up of the Indian economy provided them with new opportunities and they have shown a great deal of confidence in the changed set up. This is the time when people recognize the importance of selecting the right place to invest. According to Mr. Girish Garg, Head of Marketing, "our site has always been at the forefront for the way our projects have been dealt with. Each one of them has a unique feature about it, which best describes its utility. We use the best materials in construction, which ensures safety and longevity to the buildings. And a lot of research and planning goes into each of our projects, so as to guarantee client satisfaction. Most of our clients have given us repeat projects, impressed by our work". With their numerous projects running simultaneously they have proved that they have carved a niche for themselves in the real estate sector.

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