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Loan Providers in India
Real
estate in India is currently one of the hottest investments
options in Asia. A recent survey of the real estate scenario
acknowledge the Indian metropolis of Mumbai, Bangalore and
New Delhi as the top three investors' choices for real estate
investment in Asia. But there were concerns mainly related
to the availability of necessary funds for investment and
in the more recent times, the boom in the real estate market
opened the doors for a host of realty funds from financial
institutions. Prior to five years, the real estate segment
in India was neither organized nor were there too many large
institutions in the construction industry. But now with an
organized finance sector and with the increase in transparency
levels, it has become easier to create financing vehicles.
The decrease in housing
loan interest rates and an increase of disposable income
has contributed largely to an increased demand in the residential
segment. In spite of a rise in home loans interest rates and
qualitative sanctions being levied by the RBI on banks, buying
interest has not waned because home loans are still cheaper
than ten years ago. The retail markets are also undergoing
a defining change with the introduction of larger retailing
formats. The financial institutions also wasted no opportunity
in tapping the fund requirement catering to the inflow of
potential buyers in the retail sector. While most funds were
initially floated by financial Institutions or banks such
as HDFC, ICICI
Bank and IDBI Bank to name a few, real
estate developers like DLF Universal and even retailers
such as Pantaloons Retails (India) have now entered the real
estate sector for creating more retail facilities and have
been hugely successful.
As the realty prices in India skyrockets, housing complexes
mushrooming and city landscapes becoming unrecognizable, the
growth across all real estate segments and experts estimate
that demand will remain steady at the currently high levels
because of the improving economic environment and the real
estate sector is expected to grow 30% every year. This rising
property prices encourage banks and financial institutions
to lend more with the increase in collateral values. Although
the home loan providers have hiked their rates twice in less
than three months, home loans continue to be nearly 45 per
cent cheaper than what they were in early 2001. Because if
statistics are referred to, the interest rates which now range
between 9-10 per cent, are still much lower than what they
were ten years ago, at 16-17 per cent.
In addition to funds being raised by the Indian financial
institutions like HDFC, ICICI and IDFC abroad, the money could
be used to develop business and IT parks and townships. A
study has revealed that as many as one million homes are financed
every year in India now with an estimated home mortgages market
of US$ 10.7 billion - contributing to India's phenomenal realty
prospect.
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