Realty Boom Spreading Its Wing To Smaller Cities
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Buying A House? Now, Web-Blogs To Bail You Out Buying a house today is not an easy proposition. Whom should you to trust? Is the builder reliable? Is the project legal? The Investors are frequently troubled by such questions. But here's good news for those who want to put their hard-earned money into real estate. Blogs, that lend information on market and properties available, have come up to bail out buyers. What gives credibility to these writings is the fact that they are posted by genuine buyers, who voice their own experiences. Till recently, when it came to buying a property, one went by the developer's reputation and glitzy brochures. But with more and more new players entering the realty sector, ascertaining the authenticity of colonisers is an arduous task. "In this scenario, going through a property blog is not a bad idea. While it may be difficult to zero down on a project just on the basis of a blog report, a buyer can get a fair idea of company's background and reputation," says a buyer, who regularly scans ! them. According to a study, over 25 pct of India's 38 mn Internet users are active bloggers. Currently, there are over 120 mn bloggers worldwide and multiplying at the rate of about 10 mn per month. The number is expected to cross 160 mn mark by year-end. The messages posted by bloggers tell you whether the developer has a valid license, his political connections and other important launch and pre-launch details. The Times of India New Delhi Edition December 12 Indian Realty On An Upturn The real estate sector in India is on an upturn. In last 24 months, there has been an unprecedented growth where overall market has witnessed a 35 to 40 pct jump in capital values. Research estimates have it that the real estate market is expected to grow from the current $14 bn to a $102 bn in the next 10 years. Forget the sizzling metros, even cities like Mohali, Chandigarh, Chennai, Rudrapur, Meerut, Pune and Kolkata have seen a price rise of 30 to 50 pct in the last one year. So whatâs driving the realty market, especially in tier II & III cities? And are the prices real or there will be a correction in the market? Says Mr Sanjay Chandra, MD, Unitech Group: âThe boom in the Indian real estate market during the last few years is a result of a number of positive macro and micro factors. The macro factors are driven by the spectacular economic growth resulting in growing incomes as well as low inflation and interest rates. The micro factors include growing aspiration le! vels, availability of better quality real estate and a far wider range of choice for the same.â The Economic Times New Delhi Edition December 13 Govt Approves Proposals Worth Rs 4,080 cr The government approved foreign direct investment (FDI) proposals worth Rs 4,853 cr, including Rs 4,080 cr in the real state sector. Finance minister Mr P Chidambaram approved two sets of investments by a clutch of overseas Indians and foreign investors to fund commercial and residential property, IT parks and special economic zones. The first set of investments will be come through a company called Urban Infrastructure Ventures, which has an initial investment capital of Rs 2,484 cr. According to government sources, the company will work as a venture capital fund for the sector and will finance companies investing in the countryâs booming real estate sector. Various international real estate companies and foreign investors have lined up investments to the tune of over Rs 30,000 cr in Indian real estate sector, which is witnessing unprecedented growth. The finance minister has also approved setting up of a fund called Peninsula Realty Fund (PRF), with a corpus of over Rs 1! ,596 cr. This fund will invest in construction development projects. PRF is launched by Peninsula Land Ltd (PLL), the flagship company of the around Rs 3,000-cr Ashok Piramal Group. The plan for the fund is in line with the companyâs strategy to leverage the potential of Indiaâs rapidly growing real estate sector, a company source said. The Financial Express New Delhi Edition December 14 On PMâs Tokyo List, Rs 5500-cr Buddhist Infrastructure Upgrade The tourism sector in India is waiting eagerly for Prime Minister Mr Manmohan Singhâs visit to Japan, with details of treaties involving Japanese investment worth Rs 5,570 cr likely to be finalised during his four-day stay. The proposed projects will mainly cover Buddhist sites for infrastructure development with Japanese aid through next year. The Rs 5,570 cr fund will pay for works such as building roads, airports, tourist facilities and conservation in specified regions. Buddhist holy places in Uttar Pradesh, Bihar, Andhra Pradesh, Madhya Pradesh, Orissa, Himachal Pradesh, Sikkim and Jammu & Kashmir are likely to benefit. The Phase II of these projects, ending in 2012, will be providing Rs 680 cr for a period of seven years. Works include widening of highways, roadside plantations, conservation of monuments, construction of visitor and meditation centres, and power and water supply to Buddhist sites. Japan will is also extend support to the Phase II of the Ajanta Ellora! Conservation and Tourism Infrastructure Development Project. The places being covered by this project include Aurangabad, Daulatabad, Lonar, Nasik, Pune and Elephenta caves, apart from Ajanta and Ellora. The Indian Express New Delhi Edition December 13 Proposed Changes In Stamp Duty Calculation Stamp duties are payable at the time of registration of property. Different States levy different rates of stamp duty on property transactions. The duty is payable by the purchaser of the property. The duty is payable on the value at which the property is registered. Generally, in most States, the stamp duty rates are high. As such, many a time, purchasers tend to under-report transaction values. So, mostly in case of second or subsequent sale transactions, there is usually a variance between the transaction value and the registration value of the property. There have been various proposals from various quarters to reduce the rates of stamp duty, so as to bring out greater transparency in property deals. These include reduction the stamp duty rates for the registration of property. It has been proposed that stamp duty rates on property transactions should be slashed to 4-6 pct across States. Lower rates would be an incentive for above-the-board deals. If the proposal passes ! through and is effected, the stamp duty on sale of properties may come down significantly. The central government is proposing that the stamp duty levy should be imposed only on capital appreciation and not the entire transaction value something akin to VAT. If the new proposal is accepted and passed by the government, buyers will pay stamp duty only on the difference between the transaction value and the previous sale value of the property concerned. The incremental value of the property transaction would attract stamp duty and not the gross value of the property. If implemented, stamp duty on properties could be imposed only on a value-added basis. The Times of India New Delhi Edition December 15 Revenue Sites Canât Be Registered Anymore Registration of revenue sites in the state has been stopped. This means sites developed on agricultural lands without land conversion will not be registered by the stamps and registration department. This is an offshoot of an ordinance issued by the Department of Parliamentary Affairs and Legislation, prescribing action against land encroachers and officials involved in land-grabbing. Till now, there was no provision in law to either punish encroachers of government land or file a criminal case against them. The ordinance has prescribed imprisonment of one to three years and fines of Rs 5,000 to Rs 10,000 for encroachers and erring officials. They are: selling agricultural land for non-agricultural purposes without land conversion or prior approval, imprisonment of three years and Rs 10,000 fine; creating bogus documents regarding conversion of agricultural land for non-agricultural use, one-year imprisonment and Rs 5,000 fine; and, being a public servant entrusted with responsibility and failing to report or initiate action against unlawful conversion of revenue lands for non-agricultural purpose, three-year imprisonment and Rs 10,000 fine. The Times of India New Delhi Edition December 16 Realty Boom Spreading Its Wing To Smaller Cities The real estate boom is spreading its arc from the big metros to tier II & III cities. Given the spiralling cost of land in metros and the lack of adequate infrastructure that could have supported further growth in the major cities, the margins just had to come into the picture. And with the latter offering easy availability of land, that too large plots, and the growing pool of educated and skilled workforce in smaller towns, a sharp growth in tier II & III cities was always on the cards. No surprise then, that these cities have started to attract investments in the last couple of years from IT/ITeS sectors, as well as township and mall developers. Cities like Baddi, Mohali and Rudrapur in the North are attracting MNCs because of tax sops and easy availability of both industrial and residential land. Why are people still buying properties in far-flung areas where there is no infrastructure? Says Mr Sanjay Verma, joint MD, Cushman & Wakefield: âYes, the real estate market is getting overheated which has led to an excess supply, but it is not to the extent wh! ere it is has taken over demand. There are still 25-30 pct investors or speculators in these markets. The problem in these new upcoming cities is that of infrastructure on a macro level like airports, roads, public amenities, water etc, while on the micro level, the strained urban infrastructure capacity in suburbs poses a clear warning to rectify the situation before inefficiencies start creeping in and retarding real estate development and economic growth.â The Economic Times New Delhi Edition December 13 Noida Wooing Leading Hotel Chains Ahead of the 2010 Commonwealth Games and the shortage of hotel rooms in the national capital region, Noida is clearly beating Delhi in wooing the countryâs leading hotel chains by offering land at rock bottom industrial rates. While exact comparisons are difficult due to the diversity of locations and the inherent differences between the capital and the industrial suburb, the land cost for setting up a hotel in Noida works out to be much cheaper than anywhere in Delhi. Leading hospitality chains like the Indian Hotels (Taj group), ITC, Bharat Hotels (promoters of the Grand group of hotels) and Apeejay-Surrendra Pal group (owners of Park Hotels) have each deposited an application fee of Rs 5 cr with Noida for setting up five-star hotels. The winning company will be decided on the basis of its experience and annual turnover. Hotel chains are being lured by sites at well placed locations like near the Noida-Greater Noida Expressway at the industrial rate of Rs 7,500 per sq m.! This means that the land cost for a five-star hotel on six acres will be only Rs 18 cr in Noida. The location of the plots, coupled with the âexorbitantâ reserve price set by the DDA, were primary reasons behind the lack of interest displayed by the hospitality industry. Business Standard New Delhi Edition December 13 NRIs Triggers The Realty Boom In Gujarat The first thing UK-based non-resident Gujarati (NRG) Mr Prakash Patel did after he set foot in Bardoli a fortnight ago was invest Rs 35 lakh in a plot of land in Radha Baug. Ditto for the New Jersey-based Mr Bhagubhai Patel, who couldn't resist the temptation of picking up a residential plot at Sona Park in Bardoli during a recent visit. The unprecedented interest shown by NRGs in realty back home, has real estate developers even in dusty Saurashtra towns of Rajkot and Jamnagar not just designing exclusive schemes but also opening up overseas marketing offices to woo deep pocketed diaspora. Explaining the sudden interest of NRGs not just in residential but commercial property as well, Mr Atul Sheth of Sheth Builders, Rajkot, says: "While investments in realty overseas provides returns of barely around 5 pct, India provides around 25-30 pct returns. And if the location of the property is good, the investment can even double in two years." According to Mr Harshad Patel of Dhar! a group, which has NRGs making up 10 pct of its client list, "Having their own property also gives them a home away from home for the two months they visit Gujarat every year. NRG queries and bookings have almost doubled in the past couple of years." The Times of India New Delhi Edition December 15, 2006 Zoom Developers To Develop 300 m Tall Building Mumbai based real estate company zoom developers is in talks with the Kerala government for developing one of the country's tallest commercial buildings. Subject to regulatory approvals, the proposed building in Kochi will be over 300 m tall. "It will be a commercial cum exhibition centre. Talks are still in preliminary stages and anything concrete could only be worked out once regulatory clearances are issued," Mr Rumneek Bawa, president and CEO, real estate and infrastructure, Zoom Developers said. "We are developing a 15 acre integrated township in Patiala. The proposed township will have 2, 3 and 4 bedroom apartments, a commercial-cum-retail centre and a health centre," Mr Bawa said. Meanwhile, land acquisition is on for developing residential and commercial projects in Haryana, Punjab, Rajasthan and MP. Infrastructure is another key area that the company plans to delve into. "We have bid for the MP state road project. There are many such big ticket infrastructure projec! ts that we aim to work on a build operate transfer (BOT) model," added Mr Bawa. The Economic Times New Delhi Edition December 15 Soaring Construction Costs Sour Concrete Dreams Constructing a house or any other building is becoming costlier for the Indians, more so in Punjab and its surrounding areas. While the state government has not been able to put a check on the spiralling prices of almost all construction material, the dream of owning a house has become just that a dream for the great Indian middle class. In less than one year, cement prices have increased by almost Rs 100, bricks are now available for Rs 2600 per thousand, while sand prices in the region too, have increased 100 pct in just one year. The cost of constructing a house has gone up by almost 35 to 40 pct in the last one year. And this does not include the rising real estate prices. Till October-November last year a bag of branded cement was being sold for around Rs 140. At present it is available for Rs 225. The rate of sand, one of the most important and most-required materials for construction of a building, has also gone up sharply. From Rs 900 per 200 square feet (SFT), the c! ost of sand has now gone up to Rs 1,400 per 200 SFT. Another major factor responsible for rising cost of house construction is the sharp rise in cost of steel. Currently hovering at around Rs 2,800 per tonne (12 mm), it was available for less than Rs 2,200 at the start of the year. The Tribune New Delhi Edition December 16 Parsvnath To Build Azadpur Metro Station The real estate company Parsvnath Developers would be building the Metro station at Azadpur under an agreement with the Delhi Metro Rail Corporation (DMRC). The project to be built on BOT (Build, Operate, Transfer) basis includes the construction of 300 m of rail track at the station. Mr Pradeep Jain, chairman Parsvnath group said, âThe project will be constructed in two phases at an estimated cost of Rs 250 cr. In the first phase 50,000 sq ft of area will be constructed at an estimated cost of Rs 50 cr. However, the second phase construction for the retail sector would consist of 3,50,000 sq ft area being developed at a cost of around Rs 200 cr.â The mall will also have 50,000 sq ft of covered parking space and four lakh sq ft of space for retail , added Mr Jain. The Economic Times New Delhi Edition December 18 Tier 2&3 Cities To Emerge As Most Promising Many industry pundits feels that though the tier II & III boom may have been over hyped in the recent past, it is nevertheless real. The main problem is that these cities will be emerging as the most promising market for residential and retail developments only in the next 3-5 years as developers line up supply. Nonetheless, the rate of development in these small towns has already made big developers stand up and take notice. Says Mr Rohtas Goel, CMD, Omaxe Group, the coming up of some IT, textile and SEZs may also lead to land prices spiralling upward. IT companies and personnel are very exacting in their demands for residential and office space. It is only a matter of time before the quality of construction, amenities and infrastructure matches and surpasses that available in the metros.â Another reason for this spurt is easing of norms for foreign direct investment (FDI) early last year. This has reduced the minimum area requirement for development and led to a surge in! foreign interest. In the early days of a cityâs growth, the city core was the most prime area. But due to constraints of space and infrastructure, the cities grew, and the existing economic drivers shifted out to outer areas, making them multi-nodal and creating a ripple effect on the supporting residential and retail markets as well. This has been seen in areas such as Malad and Powai in Mumbai and Gurgaon and Noida in the NCR. The Economic Times New Delhi Edition December 13 Godrej Group Decides To Ride Realty Boom The Godrej Group, traditionally identified with FMCG and consumer durable products, has decided to ride the realty boom, and make property development its core driver. Currently, property sales barely account for 7 pct of the Rs 5,500 cr giantâs turnover. Looking forward, Group Chairman Mr Adi Godrej expects realty development to become the Groupâs largest revenue earner over the next five years. âFMCG and durables is a Rs 5,000 cr industry. There is a limit to growth. On the other hand, the property sector in India is a Rs 300,000 cr market and the opportunities are limitless,â Mr Adi Godrej said. The realty arm Godrej Properties contributes barely 7 pct, while poultry and agro-products division Godrej Agrovet makes up 15 pct. Godrejâs new restructured business plan now includes the unlocking of its vast land assets in Mumbai, principally the more-than 2,000 acres of land in its Vikhroli estate in Mumbaiâs north east suburbs that had so far been embroiled in dis! putes involving the Urban Land Ceiling Act. In Godrej Properties, 83 pct equity is held by Godrej Industries, while 13 pct vests with the Godrej family. At the national level, Godrej is set to bring in other land holdings into property development. In Bengalooru, 100 acres of land held by group company Godrej Agrovet for poultry breeding would now be diverted for realty development. Godrej Properties had initially taken the joint venture route with landowners. Godrej Properties has bought 34 acres of land near Hyderabad from Rallis India for a consideration of Rs 57 cr. The company expects to develop a large six mn sq ft IT park, or alternatively an IT special economic zone (SEZ). In Bengalooru, the company is developing the old AMCO industrial unit into a residential complex with 3,000 apartments. Hindustan Times New Delhi Edition December 12 60000 Acres, 5 Townships Govtâs Plan For Crumbling Bengalooru Itâs being pitched by the Karnataka government as the project that will put Bengalooru in the league of a Shanghai or a Singapore: a cluster of five privately built satellite townships spread over a total of 60,691 acres around Bengalooru. Shanghai Urban Construction Corporation and Singaporeâs Jurong Construction Company are among the 32 consortia vying for a place on the shortlist of bidders for the first of the townships. Chief Minister Mr H D Kumaraswamy, who is personally pitching for the estimated Rs 30,000-cr townships project, has sent out the message that the government will not allow any obstacle to stall the project or allow it to go the Bengalooru Mysore Infrastructure Corridor way. The first township is to be created on 9684 acres, including 6969 acres of private land, in Mr Kumaraswamyâs Ramanagaram constituency. âThe project is expected to offer the comforts and facilities available in Bengalooru minus the congestion, traffic, in a serene atmosphereâ! , says a planning official in the state urban development department. Meanwhile, a local farmersâ protection group has alleged that the land acquisition for the first township at Bidadi, around 39 km from Bengalooru, will kill the livelihood of around 25,000 members of the farming community in the region. The BMRDA-Bidadi township project is also being called a replica of the township project proposed in the same region by the Nandi Infrastructure Corridor Enterprise under the Bengalooru Mysore Infrastructure Corridor project that has been opposed by Mr Kumaraswamy and his father former prime minister Mr H D Deve Gowda. The Indian Express New Delhi Edition December 14 Indian Realty Sizzles For Gulf Investors The surge in foreign investment into the Indian real estate sector is being further fuelled by Gulf money. Global Asia Real Estate, Dubai Properties, the Signature group, the Palmon group are some of the names that have so far made firm commitments to invest in the local property market. Global Asia Real Esate Fund, a Shariâa compliant fund, has recently closed a $75-mn fund that will be used to invest in real estate opportunities in markets such as China and India. This is Globalâs third real estate fund after Global US Real Estate Fund and Global GCC Real Estate Fund, and is expected to invest in markets in early stages of economic and real estate development growth. In yet another instance, the UAE-based Palmon group is looking at investing in the Indian real estate and property market. The group recently invested Rs 39 cr in Mumbaiâs BSEL Tech Park. It is scheduled to invest in other cities such as Bangalore and Hyderabad. Meanwhile, Dubai-based asset management fi! rm Signature group is learnt to be close to launching several real estate funds for investment in the UAE and India, totalling over $650 mn. The Economic Times New Delhi Edition December 18 NRI Institute Celebrating NRI Divas 2007 NRI Institute is celebrating NRI Divas 2007- âTo Strengthen The Bonds Between Indians and Nonâ Resident Indiansâ on 9th and 10th January 2007 at Hotel Inter Continental The Grand , Barakhamba Avenue New Delhi. The Event is expected to be attended by more than 400 Global Indians. Honâble Union Minister of State for Industry Shri Ashwani Kumar, the British High Commissioner to India, H.E. Sir Michael Arthur KCMG, Trinidad & Tobago High Commissioner to India H.E. Pt. Maniedeo Persad, Lord Karan Bilimoria CBE DL, Dr Sam Pitroda, Lord Bill Lall and a number of Chief Ministers, Secretaries of the Ministries, NRIs and Captains of the Indian Business World will address the various Sessions. To know more click here Company Sources December 18, 2006 STUDIOLINE Conventions To Organise A Property Exhibition STUDIOLINE Conventions, the event management company are the organizers of the Indian Property exhibition called 'Homes of India'. The company is organizing a property exhibition at the 'Bahrain International Exhibition Centre', Bahrain on the 1st, 2nd & 3rd of February 2007. To know moreclick here Company Sources December 18, 2006 Mega Property Show From 12-14th January 2007 At Bengalooru A dedicated real estate exhibition, âMega Property Showâ which will present the top Builders, Developers, Promoters, Financial Institutions and Property Portals - with the largest and most comprehensive range of Property Services, Commercial and Residential Properties will be organised from 12-14th January at Bengalooru. This unique exhibition is being organised to offer a complete range of solutions for all types of properties and finance on one platform. The Property Show is organised in alliance with the Builders Association of India Karnataka (Bengalooru) Centre, Indiaâs Apex association of Builders and 99acres.com - Indiaâs Premium Property Portal as the âOnline Media Partnersâ. For further details click here Company Sources December 18 Let Out House, Get Tax Relief Tax breaks on self-occupied houses are passé; there could be a bonanza in store for those who earn rental income. The government is considering a proposal to provide tax rebate for properties occupied by tenants. Now, any rent earned by an individual is added to his/her annual income and taxed according to the applicable rate. That may not be the case if the finance ministry accepts a proposal from the housing ministry. If North Block finds merit in the proposal, then the individualâs income could stand reduced. By how much? Thatâs something that would be decided later. The housing ministryâs argument is that tax breaks would make it attractive for people to rent out properties and reduce pressure on housing. Tax experts say if the move goes through, it could see a fresh rush to buy houses, since people would not only enjoy benefits on the interest they pay on housing loan but also save some tax from the second house. There is some bad news for those who do not want t! o let out their houses. The housing ministry has proposed that tax breaks on vacant houses should be withdrawn. The ministry has estimated that 9 pct houses in urban areas are lying vacant while the economically weaker sections (EWS) and low-income groups (LIG) have to do without a dwelling. The National Habitat and Housing Policy, awaiting cabinet approval, has also made a pitch for encouraging renting out and providing sops to companies to build service apartments which can be leased out. The ministry has, however, not suggested whether the entire tax benefit should be withdrawn or the withdrawal would be partial. Times of India New Delhi Edition December 13 Punjab Shows Green Signal To Projects Worth Rs1 tn The Punjab government claimed it had cleared infrastructure development projects, including housing colonies and IT hubs, worth over Rs1 tn ($22.3 bn). Chief Minister Mr Amarinder Singh said his government had set itself a target of approving mega infrastructure projects from the private and public sector to the tune of over Rs1 tn. Over 350 mega projects had been cleared by the state government earlier. Mr Amarinder Singh claimed that once all the approved projects started, then 2 mn jobs would be generated in the state. These projects included housing colonies, shopping malls, multiplexes, industries, information technology hubs, townships, hotels and resorts. www.newkerala.com December 14 Ansal Properties Raises Rs 682 cr On QIP Basis Real estate firm, Ansal Properties and Infrastructure Ltd (APIL) has raised Rs 681.75 cr through the allotment of over 67.50 lakh equity shares on Qualified Institutional Placement (QIP) basis. Earlier in a communiqué to the Bombay Stock Exchange the company said, it proposes to allot 67.50 lakh equity shares at a price of Rs 1,010 per share. The proceeds of this private placement would be utilised for further development of projects and creating land bank, APIL vice president marketing and corporate communication Mr Kunal Banerji had said. www.zeenews.com December 13 Hirco Raises $754 m To Invest In India Hirco Plc raised about 383 mn pounds ($754 mn) in an initial public offering (IPO) in London to invest in Indian real estate projects controlled by the company that is building the worldâs tallest residential property. Hirco sold 74 mn shares to institutional investors at 500 pence each, the company said. Mr Niranjan Hiranandani, Hircoâs chairman, also controls Hiranandani Constructions Pvt, which is building a 90-story tower in Dubai. The 380 m (1,247 ft) tower is due to be completed in 2008. The IPO will give overseas investors greater access to Indiaâs real estate market, which has been growing as the economy expands about 8 pct a year and the government relaxes rules on overseas investment in Indian industries. The property developer will invest in five projects in the cities of Mumbai, Chennai and Jaipur. The Financial Express New Delhi Edition December 14 BMP To Make Record Collection Of Property Tax The Bengalooru Mahanagara Palike (BMP) is all set to make a record collection of property tax this year - Rs 400 cr. And that's not it. In the coming year, revenue collection through property tax will increase by nearly 20 pct as the civic authority will implement the Geographical Information System (GIS) in this regard. The BMP has given priority to resource accumulation this year through special surveys being conducted in the city limits to fix tax on assets coming in the property tax net. "During the survey, 1,27,971 cases of property tax differences have come to light and Rs 56 cr additional revenue has been collected. The BMP has collected a total of Rs 266 cr as property tax for the period ending November. These extra resources are being used by the BMP for developmental civil works in a systematic manner", says Deputy Commissioner (Revenue), Ms Usha Devi. Sources in the eGovernments Foundation say the entire exercise is a completely Internet-driven enterprise. There w! ill be English and Kannada content. It will make for an interactive site where a complaint can be filed online by a citizen and tracked later. The status can also be monitored with the complaint tracking system. It may be recalled here that the BMP's Revenue Department has computerised its property tax collection and digitised all the assessment registers. The eGov property system has been collecting property tax and offering computer receipts in Bengalooru for more than two years now. The eGov property system also provides Khata certificates and extracts. The Times of India New Delhi Edition December 15 Banks Skirt Norms To Finance Realty Some banks are camouflaging their lending to small, unknown real estate developers to skirt stringent capital adequacy and provisioning requirements. Banks are classifying loans to lesser known developers as general corporate purpose loans and not showing them as exposure to commercial realty sector. In addition to skirting the stricter prudential norms, they also make gains in the home loans business as they have tied up with the developers as a result of which, they cross-sell products to the borrowers. Also, the yield on loans to these real estate developers is high, banking sources said. The banksâ exposure to the commercial real estate sector has come under the scrutiny of the Reserve Bank of India (RBI) with the year-on-year growth being over 100 pct. Real estate loans by the banking sector rose 100.6 pct to Rs 13,380 cr in 2005-06 on top of a-136.7 pct increase to Rs 7,622 cr in 2004-05. The growth seems bloated because of the low base of real estate loan portfolio ! but what worries the RBI is the pace at which it is growing. Bankers however believe that the realty sector is not entirely dependent on their finances. Business Standard New Delhi Edition December 14
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