Disappointed with the Reserve Bank of India (RBI)’s holding the key policy rates, property developers say it will put further pressure on real estate.
“When the growth rate is coming down and government and industry are calling for a rate cut, they should have cut the rates,” said Rajeev Talwar, executive director, DLF, the country’s largest realtor.
Added Lalit Kumar Jain, national president of the Confederation of Real Estate Developers Association of India: “It is sad and unfortunate to see RBI taking such a stubborn stand, despite economic realities of the day. It will further decelerate the growth in real estate. We wonder if the RBI policy of causing a liquidity crunch, leading to short supply and resultant price rise, is good for the economy or increasing liquidity and pushing supply to bring prices under control is better.” Property developers are facing a twin problem. Sales are declining, while the borrowing rates for developers have risen 150-200 basis points in two years.
According to realty research firm PropEquity, the absorption of homes was down 30 per cent on a yearly basis in the September quarter in the National Capital Region and 28 per cent in the Mumbai Metropolitan Region. “A quarter point cut would have given a boost to the sector,” said Kamal Khetan, managing director of Sunteck Realty, a developer based here.
Anshuman Magazine, chairman, CB Richard Ellis, South Asia, added: “We are disappointed that RBI has kept the key policy rates unchanged. We were hoping for some relief in the form of a cut in the CRR & repo rates, as the industry continues to witness hard times, given the current situation. We hope the next credit policy decision would consider reduction of CRR, which will bring in some liquidity in the banking sector.“