Bangalore realty developers do not feel the heat of increased Repo rate
Expressing the dash hopes on RBI’s new decision to shoot up the repo rate, realty developers in the country at present, express their discontent due to increased finance cost that will influence the housing absorption in the coming festive season adversely. However, developers in Bangalore have a different take on it.
According to property consultants, the sudden hike in the repo rate will affect the buyer sentiments momentarily in Bangalore. The good news is, increasing the Repo rate by 25 bps may help to put a lid on inflation, to some degree. Impact is evident with increased repo rates, however, developers are not going to feel the heat of it in Bangalore.
Bangalore’s point of view
Regardless of the real estate scenario prevailing in the country, Bangalore realty sector has maintained its steady pace, thanks to demand and rate factors. Favorable climate and rapid development in the city has offered the realty sector shade from the scorching heat of the increased repo rates.
Market reports further testify the fact that buyers in the IT city are pretty sure about the quality of the property and this contributes to one of the most significant factors for the realty sector in the region to sustain.
According to CREDAI, prime markets such as Gurgaon, Mumbai and NCR region along with Hyderabad(due to Telangana issue) are overheated and have resulted in a slackening. This, as a result, have increased the demand curve for realty projects in the Silicon Valley. Property analysts further confirm that with shifting of companies to the IT city, influx of IT/ITes professionals and with the expansions plans at hand, demand is expected to be steady in the city despite the huge blow from RBI.
Realty developers not in sync with repo rate
Housing demand during the festive season generally springs up and contributes to the annual sales volume of a developer. In the present monetary policy, with an increase in repo rate, the borrowing cost has gained few pounds. This has cast a black shadow on the housing demand of the rest of the country, other than Bangalore, and gave the developers all the reasons to worry.
Rise in finance cost, together with the construction cost and the rapidly changing economy is likely to cut down the profit margins of the developers in the country. Such a crisis in the nation, which is almost crippling the prime realty markets such as Mumbai, Hyderabad, Chennai (except Bangalore) can be dealt by the government by putting into action certain reforms.
Steps, on part of the government, should be taken to speed up the infrastructure development process, growth of markets, transparency in regulatory process and better access to funding sources. This is likely to make the real estate sector of the nation stand on its toes once again.
