Talking to presspersons at the PBAP exhibition, Jain noted that liquidity is bothering developers as most banks were not lending money to most developers even for construction.

He pointed out that this had severely affected cash flows and the only source remaining was customers.

FDI cash
The rates in the open market were also high as also the FDI, which is at 25 to 35 per cent internal rate of return. The FDI investment in the country is about $7 billion, of which only about $200 million to $300 million had been used up in Pune.

Jain also pointed out that the panic button pressed by the Reserve Bank of India to control inflation and reduce growth seemed farfetched. "The biased approach of the bank towards real estate is unwarranted and unjust. Making home loan costlier is only creating resentment among urban population," he said.

He noted that instead of increasing the supply of residential tenements through proactive policies, the Central and State Governments were making tenements costlier by introducing various taxes (37 per cent cumulative) and levies as well as interest on project loans, pushing developers to borrow from market or costly FDIs, ultimately increasing cost of tenement.

Cost factors
Jain said scarcity of skilled labour and recent developments to discourage outside labourers have also resulted in delays and increase in construction costs, 60 per cent year-on-year on labour cost.

The increasing material costs (barring small seasonal corrections) had made construction costs go up almost 40 per cent year-on-year.