With the Budget according 'mega city' status to Ahmedabad and special benefits to Rajkot, Vadodara and Surat, banks and financial institutions in the state have received a shot in the arm.
They have become more aggressive in marketing their home loan products. Tie-ups with builders and direct sellers have become very common.
The Rs 5,500-crore (Rs 55 billion) National Urban Renewal Mission covers around 60 cities over the next five years. It covers the seven mega cities, 30 others with a population of over a million, and some towns.
The seven mega-cities are New Delhi, Mumbai, Kolkata, Chennai, Hyderabad, Bangalore and Ahmedabad.
The State Bank of India has lined up a mega property fair in Ahmedabad. "With Ahmedabad getting the status of 'mega city' we have organised the biggest property fair of Gujarat in the city. This involves over 50 leading builders and over 100 housing projects. We expect to receive loan proposals to the tune of over Rs 200 crore (Rs 2 billion) from the event. We recently held three such events at Vadodara, Surat and Rajkot and received loan proposals of Rs 200 crore," D C Raichandani, deputy general manager, Ahmedabad, State Bank of India, said.
IDBI Bank is also planning to become more aggressive in the home loan segment.
"Following the National Urban Renewal Mission of the Government of India, we are bullish about financing the real estate segment. We have tied up with leading builders and offer pre-approved loans for various properties. With the merger with IDBI, we plan to consolidate our home loan business," said Ramesh N G S, retail head, Gujarat, IDBI Bank Ltd.
According to industry sources, with the liberalisation of foreign direct investment in construction and Ahmedabad getting the status of 'mega city' the real estate prices in the city are set to more than double in the next five years.
"Things are looking positive and we are bullish about financing in the near future. We are aggressively marketing our various schemes through six of our retail outlets in the city," said a senior official of Gruh Finance.
"We are offering extremely concessional interest rate at 7.25 per cent for home loans sanctioned in the fair. Further, as a bonus to all government and public sector employees, an additional concession of 0.25 per cent is offered, meaning a home loan at the rate of seven per cent, which is the lowest in the industry. Even, no processing fee or any other charge is levied on home loans sanctioned during the fair," said Raichandani.
The housing loan market in Gujarat is estimated to be around Rs 5,000 crore (Rs 50 billion), with Ahmedabad alone accounting for business of over Rs 1,000 crore (Rs 10 billion).