REAL ESTATE

Builders expect home demand to improve

The Reserve Bank of India’s decision to cut key interest rates is likely to reduce borrowing cost for both home buyers as well as developers leading to increase in housing demand, realty firms and consultants said on Tuesday.
They sought further cut in interest rates as well as policy reforms for the growth of realty sector, which is facing a huge demand slowdown in last few years. RBI on Tuesday cut interest rate by 0.25 per cent for the third time this year to spur investments and growth.

“It’s a good move. Banks should now pass on the benefit to boost demand. Interest rate on home loans should be 9-9.5 per cent,” DLF’s whole-time director Rajeev Talwar said.

Realtors’ apex body Credai president Getamber Anand termed RBI’s decision as good step but too less. “The market was expecting bigger reduction. Banks should pass on the benefits immediately as per RBI direction,” he added.

Parsvnath chairman Pradeep Jain hoped that banks would now pass on the benefit to the customers thereby stimulating the overall demand. “Such liberal moves coupled with policy reforms are necessary for the revival of the real estate sector in our country,” Jain added.

Credai (NCR) president Manoj Gaur said the move has come as a breather for the real estate sector. He expected another 25 basis points cut in next 3-6 months time.

Property consultant JLL India Chairman & Country Head Anuj Puri said the downward revision in RBI’s repo rate would positively impact the sentiments surrounding the real estate market.

“Banks will now be able to offer loans at more attractive rates. Cheaper loans for home buyers will prompt a renewed interest in residential property purchase from end users and investors,” Puri said, adding that cost of funding for real estate developers should also reduce marginally.

Tata Housing managing director & CEO Brotin Banerjee said: “It is now important that cumulative rate cut amounting to 0.75 per cent since January this year, gets translated into the lending rates being offered by the banks and financial institutions to the consumers.”

Cushman & Wakefield executive managing director (South Asia) Sanjay Dutt said RBI’s decision to cut repo rate would provide a much-needed stimulus to the economy.

“Given the tepid demand conditions in the real estate sector, a cut in repo rate bodes well to improve sentiments of home buyers and spur home-buying decisions. However, the actual impact can be seen only when commercial banks lower their lending rates,” Dutt said.

C&W said that the cost of borrowing could also decrease marginally for developers, who have been reeling under high funding cost and increasing cost of construction.
HDIL’s senior vice-president (finance and investor relations) Hariprakash Pandey hoped that this rate cut would be replicated by the banks by reducing interest rates, which would not only accelerate demand for housing, but also boost manufacturing and ancillary industries too.

General Motors India, Vice President, P Balendran said the reduction in repo rate is a welcome decision although it is not enough to stimulate demand for automobiles in a sluggish market. “The benefits of reduction, if passed on to the customers, should provide a fillip to automobiles sector which is slowly getting into a recovery path,” he added.

The rate cut should facilitate corporate investments in various sectors and encourage consumer spending, Balendran said.
“The reduction is still not on the expected lines and not enough to spur demand as there will be only marginal fall in equated monthly installments if benefits passed on to the consumers,” he added.

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