Real estate developers in the country should rely on technology and focus on innovation to make homes more affordable for a large number of population rather than building apartments for themselves and creating huge unsold inventories across the country, bankers who spoke at a realty workshop organised by CREDAI here recently urged.
Some of the panelists suggested that the realty sector should follow the example of the auto sector which embraced innovation to bring down the cost of cars over the years.
Speaking on the occasion, Mithun N., zonal business manager, Corporate Finance, PNB HFC, said there was a huge disconnect between what developers offered and what buyers could afford.
“Customers are unwilling to avail even their pre-approved home loans. Some 60% of approved loans are not resulting in home buying and this indicates a clear mismatch between supply and affordability,’’ he noted.
K.P. Aggarwal, Regional Head, HDFC, said banks did not want to depend on unsold inventories for financial closure as lending would be viable only if the developers delivered projects in time and received the money in time.
“It is time for the real estate industry to introspect, look at the fundamentals and take cognisance of the changing dynamics of the sector and find its way forward. Innovation will bring the cost of homes significantly down and give the industry a rejig,’’ Mr. Aggarwal emphasised.
Echoing similar sentiments, Nidhi Jain, branch operations manager at ICICI Bank, said, “Be it luxury apartments or a budget homes, all products have to be designed to make it viable for the markets. Else, projects won’t get sold.”
Mayank Saksena of Anarock Properties said about 80% of the time, builders were building for themselves and not for customers, a trend observed across the country.
“Years ago, basic SUVs used to cost ₹30 lakh, today they are available in the ₹8 to ₹10 lakh range and tomorrow their cost may further come down. This is possible, thanks to innovation in the sector. The realty sector should replicate it,” suggested Mr. Saksena.
Does it all mean that banks and financial institutions are shying away from realty sector?
“Real estate is an important portfolio for banks. In fact, all banks have dedicated teams to service the industry. Banking system has money, but we can’t lend when there are risk factors around asset growth,” said Abhijit Majumder, CGM at SBI.
