This story is from January 17, 2019

70% fund received in any project getting blocked: CREDAI

70% fund received in any project getting blocked: CREDAI
Picture for representational purpose only.
INDORE: A sharp increase in levy and Madhya Pradesh Real Estate Regulatory Authority (RERA) norms blocking 70 per cent fund received in any project, amid thin financial liquidity in the market, has restricted the growth of real estate sector, said Confederation of Real Estate Developers of India (CREDAI).
The newly-elected executive board members of CREDAI, Indore chapter have expressed worries about government policies and restrictions hurting the real estate in the state.

CREDAI said, as per RERA 70 per cent cost received in any project remains blocked in the account and is released subsequently which creates shortage of money to run the project.
CREDAI Indore chapter chairman Liladhar Maheshwari said, “Due to RERA norm, builder has to manage required fund to run the project from the market at higher interest rates of 15-18 per cent which ultimately an added cost to the project and buyer.”
He said earlier the builder was allowed to utilize the funds received and hence the financial cycle of the project kept moving which is not possible now.
According to CREDAI, lack of availability of CC/OD/LAP limits for real estate developers as it is a negative sector from RBI guidelines has squeezed the options for developers to raise funds from banking channels and only term loan is available for ongoing real estate projects.

Vivek Dammani, joint secretary, CREDAI said, “In recent years, stamp duty has gone up by almost 40 per cent to 10.5per cent from 7 per cent a few years back. This added burden of stamp duty is negatively affecting the sales figures.”
Real estate developers said private finance market has practically been diminishing for most them post demonetization.
They also said that discontinuation of sale power has made properties unattractive to investors as earlier short-term investors were actively participating and investing in projects on the basis of power agreement.
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