Hurt by the establishment's statements that have the potential to dampen demand, the country's largest real estate player DLF Ltd asked the government on Friday to rather focus on augmenting supply and cutting interest rates to further boost growth in the sector.
"The government should think of augmenting supply and not curtailing demand, which is a theoretical exercise," DLF Chairman Kushal Pal Singh told PTI.
Only last week, Finance Minister P Chidambaram said the government was keen to curb demand in overheated sectors like real estate and housing. Incidentally, the finance minister's statement came when bidding process for the initial public offer of DLF was going on and the impact was seen immediately on Dalal Street with a sharp fall in the share prices of listed realty firms.
Market observers
said the statement also hurt the investors' sentiment toward the IPO. DLF, which has a land bank of 10,255 acres, could raise Rs 9,625 crore (Rs 96.25 billion) through the public issue -- subscription for which closed yesterday. Bids were received for 3.5 times the size of the issue comprising 17.5 crore shares of Rs 2 each.
Asked whether the government's over-cautious statements about overheating in the real estate sector hurt the demand for the DLF IPO, Singh said: "Definitely, very definitely."
"Intention is to constrain demand in those sectors where there are signs of what you call overheating and example of that could be real estate and housing," Chidambaram had said. "The only way to contain the increasing (property) prices is to flush the market with more supply than demand... (and) by thinking positive," Singh said.