Real estate firms want banks to pass on the rate cut
Consumers could benefit if financial institutions pass on the same and thus, help spur demand for homes
Mar 05, 2015
Source : The Hindu Business Line


The real estate sector, which has been seeing inventory pile-up, negative investor sentiment and continuous raw material price rise, cheered RBI’s repo rate cut, saying consumers could benefit if financial institutions pass on the same and thus, help spur demand for homes.

Developers and industry watchers said the decision could tackle the liquidity crisis in the near term.

Pradeep Jain, Chairman, Parsvnath Developers, said the move will help boost sales. “Mr Rajan is slowly becoming a man of surprises. A 25 bps cut would ease out liquidity in the market and would push sales. It would also encourage banks to cut lending rates significantly,” he added.

Gagan Banga, Vice-Chairman & Managing Director, Indiabulls Housing Finance, said, “A synchronised action plan between the government and the RBI may result in the upcoming growth cycle to be longer than the normal 18-24 months economic cycle which India normally goes through.”

According to Liases Foras, the unsold stock stands at 832 million sq feet in the quarter December 2014 quarter.

CREDAI chief Lalit Kumar Jain said the rate cut should help the industry and business in general to tackle the liquidity crisis. He pointed out that several projects have been delayed due to financial crunch; hence rollover / restructuring should be permitted in the current scenario. David Walker, MD, SARE Homes, said: “We expect financial institutions will pass on this reduction to customers and this in turn will give buyers confidence that with lower EMIs property purchase will be more affordable.”

Shishir Baijal, CMD, Knight Frank India, said since the Budget did not give substantial impetus to the real estate sector other than the clarification on REITs, the rate cut reconfirms a lower rate regime this year.

Brotin Banerjee, Managing Director and CEO of Tata Housing, said: “The rate cuts announced in January had not translated into action by the banks, but a cumulative cut now amounting to 0.5 per cent will enhance lending powers of banks.”

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