Deepak Parekh lists this solution to revive realty sector; check why he bats for REITs

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Updated: Nov 06, 2019 7:09 PM

Even as the unsold inventory rises, the Reserve Bank of India (RBI) could consider a one-time restructuring of realty loans to maintain liquidity and ensure completion of projects, HDFC Chairman Deepak Parekh said.

PMC Bank fraud case, HDFC chairman, PMC Bank scam,  NPA, HDIL, GDP, SBI Arundhati BhattacharyaREITs are expected to emerge as the preferred investment avenue in the future, HDFC Chairman Deepak Parekh also said at an event.

Even as the unsold inventory rises, the Reserve Bank of India (RBI) could consider a one-time restructuring of realty loans to ensure both liquidity and completion of projects, HDFC Chairman Deepak Parekh told CNBC TV-18 at the India Mortgage Leadership Conclave 2019. Adding, he said that the subvention schemes have negatively hit the real estate sector. However, Deepak Parekh also raised hopes by saying that affordable housing currently appears to be a bright segment for now.

REITs are expected to emerge as the preferred investment avenue in the future, HDFC Chairman also said. Residential REITs is another way of developers raising money in the future, he said. A real estate investment trust (REIT) is a closed-end investment company that owns assets related to real estate such as buildings, land and real estate securities. REITs sell on the major stock market exchanges just like common stock. On recent defaults, he said that the banks and investors are now careful of lending to the housing finance companies (HFCs) because of one company’s instance of default.

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Earlier, the State Bank of India (SBI) Chairman Rajnish said that it’s not right to always ask the government for help, especially when the problem is created by the builders. The current issues need to be solved by the industry itself, Rajnish Kumar also said at the event. “The problem is not created by the govt, but by builders. Why would the govt set it right?”, he said. On finding ways to help the struggling sector, he said that there is a need to improve its affordability so as to help it recover. Construction is a costly affair owing to higher land costs and other taxes, Rajnish Kumar noted. Adding, he said that the taxation structure for the real estate sector is not favorable.

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