New Delhi: Unitech Ltd, India’s second most valuable real estate company, expects sales of Rs15,000 crore from a luxury housing project it plans near New Delhi.
The New Delhi-based developer acquired land for the project at Rs1,582 crore in May last year, Unitech said in a statement on Thursday. The total cost of the project, to be built in Noida, will be Rs6,000 crore.
The company plans to borrow Rs2,500-3,000 crore locally this year, Sanjay Chandra, managing director, said.
The cost of debt for Unitech will increase 300 basis points this year from last year because of restrictions on overseas borrowing, he said.
Unitech is building new projects as record economic growth in the world’s second-most populous nation is fuelling demand for homes and office spaces. India’s economy expanded 9.4%,the fastest since 1989, in the year ended 31 March. TheReserve Bank of India expects the economy to expand 8.5% in the current year.
On 18 May, India banned real estate companies from raising funds overseas to develop townships, a measure aimed at slowing foreign-exchange inflows that have helped the rupee gain against the dollar, hurting the country’s exporters.
The government also capped the ceiling on costs of overseas loans by 50 basis points, or 0.5 percentage points.
Interest payments, fees and expenses relating to securing an overseas loan with maturity of between three and five years must not exceed 150 basis points above theLondon Interbank Offered Rate (Libor).
The ceiling for loans above five years is 250 basis points above the Libor, the government said.
The central bank asked banks to curb loans to the real estate sector, making it harder for developers to obtain cheap financing. bloomberg
Sumit Sharma in Mumbai contributed to this story.