 "Realtors cry foul over RBI move to hike repo rate")
Stung by the Reserve Bank of India's move to hike repo rate, real estate developers said the central bank decision would hurt home buyers and property companies.
Developers were expecting a rate cut to revive demand for housing. At least two developers said RBI has missed the opportunity to boost growth at a time when many areas such as markets, rupee were doing well.
"It is an opportunity missed. There was an opportunity to keep on building confidence in the environment the new governor had prompted," said Rajeev Talwar, executive director at DLF, the country's largest developer.
"The rupee was doing well, markets were doing well. But this step is not related to food inflation. This step is not going to help control inflation. Till the time you make bank finances affordable to buy cars and homes, how will you kick start economic growth," Talwar added.
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Pradeep Jain, Chairman of Parsvnath Developers said the RBI is not a good signal for the realty segment which is going into festive season. " Banks have already started raising their rates. This is going to hurt both buyers as well as developers” Jain said.
"Though increasing repo by 25 bps may curb inflation marginally or may hold Rupee for a while, it is going to impact market sentiments significantly," Jain said.
Added Brotin Banerjee, managing director, Tata Housing: "“The decision to increase repo rates comes as a surprise, although the Governor has pledged to balance this going forward. In the short-run, banks can be expected to increase interest rates which will impact consumer sentiment in the real estate industry."
However, some builders and consultants justified Raghuram Rajan's first policy after taking over as RBI governor. "The first two weeks has been tough for Rajan. I think he will soon turn the corners to bring back the growth. It is initial measures to correct the issues in the country's growth,." Hiranandani said.
Added Sanjay Dutt, managing director, Cushman & Wakefield, a global realty consultant: “Today’s review of monetary policy would have disappointed most people as many were looking at the new RBI governor to make radical economic changes. However, high expectations from the new RBI Governor to provide all the solutions to the ailing Indian economy are grossly misplaced and unrealistic."
"The Governor has stuck to his mandate of managing the monetary risks which continue to be highly prone to inflationary and currency devaluation risk," Dutt said.
Dutt added that, for real estate, the increase in the repo rate is going to have some downside in a stressed environment that is already plagued by slowdown in sales, increasing input costs, liquidity issues and high costs of capital, etc.