Venue—Hotel Kohinoor Continental, Mumbai
Moderator—Pranay Vakil—Chairman Praron Consultancy
Atul Modak—Head-Kohinoor City
Gaurav Gupta—Director, Omkar Realtors & Developers
Jhumur Ghosh— National Feature Editor, Times of India
Ravi Sinha—CEO & Managing Editor, Track2Realty
Pranay Vakil: As a developer if someone wants to come and tell you Atul that instead of borrowing at 11.5 per cent or 12 per cent, whatever the rate lender gives you, you will get this money at 3 per cent, how do you react?
Atul Modak: Wow
Pranay Vakil: Now will you pass on that benefit to the consumer or you will keep that benefit for yourself?
Atul Modak: May be half-half.
Pranay Vakil: Hahaha…now assume half the benefit goes to the buyer. Even then you will think it is not a bad idea as interest rate might be 7-8 per cent.
Ravi Sinha: But the larger issue is, and Atul has also partly agreed, whether that kind of funding is coming your way after India’s over glorified growth story going in to red and added to the fact that no bank is going to trust you. Gaurav do you think foreign lenders are willing to put money into your sector?
Gaurav Gupta: I think if you talk about local banks problem with the local banks is that RBI has tied their hands and in terms of exposure to the real estate sector all of them have sectoral caps. Pricing mechanism is in such a way that they have to keep the larger reserves.
I am sure that once the volatility in the foreign currency settles down, then you will see ECB coming down. But again how much of it you will be able to utilize is questionable since it is again allowed towards affordable housing construction.
In terms of benefits to the customers, a significant indirect benefit is that today a lot of projects are stuck because they could not deliver on time due to lack of finance. Getting projects delivered on time would be an indirect benefit to the customer, which will catalyse many direct benefits including the low cost of construction.
Ravi Sinha: I would like to have the opinion of another developer, completely as a layman. I am a home buyer, I read stories in newspapers that the RBI has tighten the noose on the sector. Don’t you think this is the fall out of many of the banks burning their fingers with you guys?
Pranay Vakil: Had he been into airline industry, he would have agreed to it.
Jhumur Ghosh: You know as a lay person, just going by the newspaper reports, I am clearly feeling that the government is not on the side of real estate sector. It comes across that way—either there is a policy crisis, or there is a understanding crisis, or just not interested to be on the side of the industry. Does the developer community feel the same?
…to be continued
