RBI rate cut holds out hope for realty sector

Q: Good news for realty player!!!! The repo rate cut by the central bank could signal the beginning of the change for real estate industry that has been hit by slowing sales and a massive liquidity crisis over the past 2 years.

Joydeep D,

16th January 2015

Real estate News in Pune

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As per Pankaj Kapoor, managing director of property research firm Liases Foras, pointed out that in cities like Mumbai and Bengaluru, where there is higher end-user demand, marginal improvement in sales could come in faster. But the National Capital Region will take time.
In addition, property prices are expected to be motionless for the next year or two, which will help in repairing the affordability gap that exists in most markets today.

Harmeet Kaur,

17th January 2015

Comment

There are other positive signs too. Outsourcing companies have seen a healthy growth in the business with the devaluation of the rupee. That can be seen in the large amounts of office space that was leased in 2014. If business performed well then it lead to IT companies picking up more talent and giving higher increment to retain talent, it will surely trigger home sales.

Kaushik Bardia,

17th January 2015

Comment

Yes, and as per Commonfloor.com chief executive officer, cheaper home loans could be the trigger for potential buyers. It is a step in the right direction as property fence-sitters will now take the jump, which in turn will lead to increased home sales.

Harmeet Kaur,

16th January 2015

Comment

And it will also help the developer as well, cost of capital will reduce if lending rates fall. It could allow them to sell homes cheaper, stimulating demand. As per executive managing directors, South Asia, Cushman & Wakefield said reduction in rates should be at least 1% overall.

Kaushik Bardia,

16th January 2015

Comment

Yes Kaushik,
RBIs move comes at a time when things have begun to look up for the real estate sector as the economy has been performing better, salary increments are expected to be in good shape and if the amount of office space that was leased in 2014 is any indicator, job growth isnt far away either. And rate cut will give a big boost to consumer confidence, we expects more rate cuts this year.

Harmeet Kaur,

16th January 2015

Comment

It really sounds great. RBI on Thursday cut repo rate by 0.25 percentage points to 7.75% in the first rate cut since 2013. Home sales have been on the decline for the past 2 years. The quarter to September 2014 saw a drop of 25% in home sales in India's top 6 cities, compared to the previous 3 month period, to jump to the lowest level ever since 2009 while unsold inventory rose to a high of 815000 apartments, according to property research firm Liases Foras.

Kaushik Bardia,

16th January 2015

Comment

In spite of the fact that industry executives said home sales are unlikely to get a big push before the festive season later in the year, they added that the Reserve Bank of Indias move could lift the sentiment. If this continue, then home loan rates, bank lending rates as well as cap rates for REITs (real estate investment trusts), when they happen, will come down.

Harmeet Kaur,

16th January 2015

Comment