Real estate in india is becoming attractive for investors who are looking to make substantial profits. Is turnaround in the real estate sector imminent and would government policies boost the sector? Kabul Chawla, managing director, BPTP, tells that improved liquidity and low interest rates have helped revive demand in the residential sector. Also, India is being acknowledged as the one of the fastest growing economies in the world and in the existing economic scenario, real estate has emerged as one of the most appealing investment areas for domestic as well as foreign investors Excerpts:

How do you think the recent announcement by the finance minister of imposing a service tax on the activity of construction would impact the real estate sector?



Service tax imposition on residential booking of under-construction property will certainly affect the housing sector. This will lead to increase in the price of the apartments by 3 to 4 per cent.

As several banks have increased their home loan rates and also put an end to the special teaser rates, do you think the move will hurt the real estate sector, as homebuyers would have to pay higher price for a property that is under construction?

Increase in interest rates will add to the burden on the consumer. But thanks to huge jobs creation and salary hike across all sectors, customers would end up with more disposable income in their hands. It will offset the impact.

While concerns over liquidity and demand constraints have eased, developers were looking to execute their planned projects to maintain cash flows, where do you see the property prices heading?



Improved liquidity and low interest rates have helped in increasing demand in the residential sector across country. The buyers have benefited from the rationalisation of the prices in this segment and, thus, were encouraged to take decisions on buying homes. We have also benefited from this and with launch of our various projects in Faridabad and Gurgaon. Due to rationalisation of prices and attractive schemes and concepts, we have been able to sell over 8000 units in this year alone and thus build strong cash flow for the company. We further reduced our debts obligations and liabilities on long-term land banks and focused on executing our projects, thus improving the cash flows.

Transparency in the pricing of land and houses still continues to be a major concern for potential investors. How do you deal with that and what are your views on the concept of introduction of Escrow accounts for increased transparency?

The company believes in transparency. Transparency in the pricing of land and houses is definitely there. Developers offer a house of certain size at a certain price. Complete floor plans with area mentioned with all amenities, facilities offered are conveyed to consumers before they buy a house.

Why haven’t Reits and REMFs been launched in India so far and when do you see them coming? How are they going to impact the state of real estate sector?

Sebi is working on this. Sooner or later Reit and REMF would be launched in India. Reit and REMF are the best way for investors in India to get exposure to the real estate market. This will help the investors to acquire a diverse portfolio of real estate and de-risk from the single asset ownership. This will bring more foreign money inflow into the country and help the GDP. India is being acknowledged as the one of the fastest growing economies in the world and in the existing economic scenario, real estate has emerged as one of the most appealing investment areas for domestic as well as foreign investors. And this high growth curve in the real estate sector owes some credit to a booming economy and liberalised foreign direct investments (FDI) regime in the real estate sector.