 "Big realtors expect cut in next policy; smaller ones disappointed")
While large ones such as DLF, Hiranandani and Brigade say this was expected and bigger rate cuts are in the offing, smaller real estate firms are disappointed.
“I think the governor is waiting for the end of the financial year to give one more dose. First, he was putting pressure on the government to reduce its fiscal deficit. Now, he is putting pressure on banks to set their books right,” said Rajeev Talwar, executive director at DLF, the country’s largest developer. He expects the policy rate to go down another 50 basis points (bps) by the end of the financial year.
Niranjan Hiranandani, managing director of Hiranandani Constructions, said Rajan waited not because of whether internal demand could sustain or not but because external signs are not clear. He, too, expects another 50-bp cut in rates, at the next policy review.
While there is disappointment among developers about banks not passing on the earlier rate cut benefits to borrowers, Hiranandani said he expected banks to do so in the next 30-60 days to home loan borrowers. However, he added, a cut in rates for corporate loans would take time.
“With the economy on an uptick and key legislations in the offing, growth is already reflecting in the automobile, consumer and manufacturing sectors. Another rate cut would have fuelled growth but there are multiple triggers lined up in the next 60 days to revive demand in the real estate and construction sector, specifically in Bengaluru, Chennai and Hyderabad,” said Om Ahuja, chief executive, residential, Brigade Group.
Smaller developers are disappointed
"The industry was hoping for a marginal rate cut which was the need of the hour, even a small rate cut would have given a right signal about downward trend in interest rates and created an optimistic environment among buyers and encouraged the fence sitters to take a positive decision," said Rajesh Prajapati, MD, Prajapati Constructions, a Mumbai based developer in a note sent by the company.
Added Manju Yagnik, Vice Chairperson, Nahar Group, in a note: "The real estate sector was expecting a further rate cut at this stage which would have helped in improving market sentiments, bringing some respite to customers with home loans as well. Given the current property rates and stagnant market conditions a rate cut would have sent out a positive signal to home buyers and industry alike and would have given the much needed thrust to the realty sector. "
