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Real estate sector: RBI extends restructuring of project loans by a year

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Real estate sector: RBI extends restructuring of project loans by a year

Move expected to help developers complete stuck projects

In a major relief to the struggling real estate sector, the Reserve Bank of India has decided to extend the restructuring of project loans by a year. While this will help stuck projects, it will not do much in terms of creating demand.

Loans for projects that have been delayed for reasons beyond the control of their promoters have been extended by another one year without downgrading the asset classification. This aligns with the treatment accorded to other project loans for the non-infrastructure sector.

“This is a big move and will bring much-needed relief to the cash-starved real estate sector – and to both developers and the HFCs from the liquidity perspective. It will help ease out the time for maintaining and managing cash flows for cash-strapped developers, and help them complete several stuck projects. That said, it will not address the other major issue faced by the sector – that of continuing low demand,” said Anuj Puri, Chairman – ANAROCK Property Consultants.

Shishir Baijal, Chairman and Managing Director, Knight Frank said: “With the lower provisioning requirement for retail loans extended to the housing segment, we hope that the new measure will translate into lower cost of loans for home buyers, as well.  For the development side of the business, the long-standing industry demand for asset classification has been addressed. This will augment the liquidity situation for developers too. With these two significant initiatives by the RBI, the real estate sector will hope to make a faster come-back.”

Credits: thehindubusinessline

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Real Estate

Maharashtra consumer forum asks Star India Projects to pay compensation for delay

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The Maharashtra State Consumer Redressal Forum has directed a builder to pay a flat-buyer Rs 75,000 in compensation for not handing over possession of the flat for ten years, even after accepting 95 per cent of the sale price.

Anil Sharma, a retired Navy official, had alleged that he and his wife booked a flat in a scheme being developed by Star India Projects at Karjat near Mumbai for Rs 13,74,600.

He paid the firm Rs 13,32,870 betweeen July 2010 to April 2014. The flat was to be handed over by May 2012, but the construction suddenly stopped and the flat buyers were not intimated about it, Sharma alleged.

Finally, he and his wife moved the consumer forum, seeking refund of the money paid.

Star India Projects’ lawyer argued before the forum that it was ready to hand over the possession but the complainant refused to accept it.

But the forum didn’t find any merit in the real estate firm’s contentions as it did not submit any supporting documents.

“Till today complainants did not get possession of their dream house. Builder cannot ask flat purchaser to wait for indefinite period for getting possession of their dream house despite payment of full consideration,” the forum observed.

In its order earlier this week, it held Star India Projects guilty of “deficiency in service” and “unfair trade practices”, asking it to refund Rs 13,32,870 along with Rs 65,100 paid for stamp duty and Rs 14,910 paid for registration charges.

The forum further directed Star India Projects to pay Rs 50,000 as compensation for “mental and physical harassment” and Rs 25,000 towards litigation cost.

Source: PTI

(Note: The story has been published without modifications to the text. Only the headline and intro have been changed.)

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The minister said that a lot of people do not want to give their properties on rent because they think that “if you have a weak legal system, you might not get your property back”.

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Union Minister Hardeep Singh Puri on Thursday said the ministry of housing and urban affairs (MoHUA) will soon come out with a rental policy. The policy would help alleviate housing shortage in urban areas by encouraging renting of homes as millions of houses lie vacant across the country. 

“Very soon you will see a rental policy out,” he said here at a function. 

The minister said that a lot of people do not want to give their properties on rent because they think that “if you have a weak legal system, you might not get your property back”. 

He expressed hope that the new policy will overcome this concern. 

“You have got the template etc (of the policy). States can tweak it to the extent they like. You will have a situation where large amounts of residential accommodation which is not being utilised will then be released into the market,” the minister, who holds the independent charge of housing and urban affairs ministries and civil aviation, said.

Source: PTI – Realtynxt

(Note: The story has been published without modifications to the text. Only the headline and intro have been changed.)

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Mumbai slips to 10th position in terms of rentals, says report

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The 15 cities surveyed are San Francisco, Madrid, New York, Singapore, Sydney, Washington, London, Mumbai, Tokyo, Mexico City, Paris, Hong Kong, Houston and Frankfurt.

MUMBAI: The realty sector slowdown and lack of business confidence have brought Mumbai down to the 10th position this year, among the top 15 global cities, in terms of office rentals, a recent Knight Frank survey report released today said.

The 15 cities surveyed are San Francisco, Madrid, New York, Singapore, Sydney, Washington, London, Mumbai, Tokyo, Mexico City, Paris, Hong Kong, Houston and Frankfurt.

According to the Knight Frank survey report, Mumbai which ranked sixth among global cities in 2007, slipped to the 10th position in 2014 mainly due to delayed revival of the Indian economy and lack of business confidence.

“Delayed revival of the Indian economy and lack of business confidence took a toll on the Indian office market. This had led to Mumbai slipping from the sixth to the 10th rank in terms of rental ranking of global cities between 2007-14.

“While rental decline has been the primary reason, a depreciating rupee added fuel to the fire,” Knight Frank Chief Economist and Director of Research Samantak Das said in the report.

Among the top 15 global cities, office rentals in Mumbai are lowest at Rs 250 per square feet per month, compared to London and New York which stand at Rs 900 square feel and Rs 360 per square feet respectively, the report said.

However, the report claimed that going forward, the city’s office rentals are expected to grow by nearly 15 per cent over the next five years due to “improved sentiment,” the report said.

According to the report, current vacancy levels within the Mumbai office market lies at 23 per cent, which is the highest, as compared to the top 15 global cities.

However, rental yields within the city’s office market, is the highest, at 10.3 per cent, as compared to cities like Sydney, Washington and Shanghai, which offer rental yields of 6.3 per cent, 6.2 per cent and 6 per cent respectively, it said.

“Technology and infotech sectors have been key drivers of the take-up of office space in Asia. Financial services and banking, the sectors which led the pre-global financial crisis boom, continue to be more cost conscious. While there is still demand from these sectors, there has been less front or prime office demand,” Knight Frank Asia Pacific Head of Research Nicholas Holt said in the report.

However, in the coming years, financial services and banking occupiers to return to drive sizeable segments of demand, he said in the survey report.

Credits: Economictimes

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