Real estate clampdown may affect housing sector

New Delhi, May 30 | Updated: May 31 2007, 05:30am hrs
DLF supremo KP Singh has said that recent government measures like the clampdown on ECB for integrated townships as well as the regular hikes in home loan rates aimed at curbing the flow of money into real estate could encourage developers to find other means to obtain funding. He added that these measures will slow down the demand for housing.

A number of such ways can be illegal. So, in a bid to regulate the sector, the government is adopting ways that will, in fact, prove to be counter-productive. This will decrease the demand for housing and increase realty rates. The government has to adopt measures to propel the real estate growth rather than put obstacles in its path, he says. Some of the measures that he feels can be beneficial for the sector include repealing of archaic laws like the ULCRA (Urban Land Ceiling & Regulation Act) and the rent control act; improving infrastructure; bringing down the cost by increasing the supply (by allowing cities to go vertical) and revamping town planning. DLF on Wednesday said that it hopes to raise Rs 9,625 crore through a public issue of 1.75 crore shares in the price band of Rs 500-550 between June 11-14, 2007.

Out of the net proceeds of the issue, the company proposes to utilise Rs 3,500 crore for acquisition of land and development rights, Rs 3,493.4 crore for development and construction costs for existing projects and the remaining amount for prepayment of loans.