Developers expect slight demand uptick in festival season


New Delhi, Oct 6 (IANS): Real estate developers have largely witnessed subdued demand and low absorption of residential properties in the past few years, but with the latest reduction in the RBI repo rate and few banks launching repo rate-linked home loans, market players feel that the traditional festival demand would witness a slight uptick this year.

The Reserve Bank of India's (RBI) Governor Shaktikanta Das on Friday announced a 25 basis points (bps) cut in the repo, or short-term lending rate for commercial banks, to 5.15 per cent.

"The RBI decision to further reduce the repo rate by 25 basis points to bring it to 5.15 per cent gives the real estate sector a reason to cheer at a time when it expects sales to improve in the ongoing festive season," said Dhruv Agarwala, Group CEO, Elara Technologies.

Acoording to Rajat Goel, Joint Managing Director, MRG World, the repo rate cut is in sync with the government's recent measures, including a reduction in the corporate tax, to promote credit offtake in order to boost economic activity during the festive season amid the ongoing slowdown.

Although the monetary policy committee (MPC) has decided to go for rate cuts in its last five successive bi-monthly meets, the transmission of these reductions to retail loans have been slow and not in proportion to the repo rate cuts, which remains a cause of concern for retail borrowers.

One of the positive factors has been that banks have started to come up with repo-rate linked home loans.

Moreover, there have been a slew of measures announced recently to support the sector, including capital support for housing finance companies and creation of a Rs 20,000 crore corpus with half the investment coming from the government.

Market players are of the view that the rate cuts along with these measures should aid the ailing sector.

Prashin Jhobalia, Vice President for Marketing Strategy at House of Hiranandani, says that festive occasions still govern the buyers' psyche across the country with several property seekers advancing or postponing their purchase decisions to coincide with the festivals.

"Potential home-buyers associate the festive season with security and prosperity, making them sanguine about lucrative offers available in the real estate market through this period," Jhobalia said.

  

Comment on this article

  • N.M, Mangalore

    Mon, Oct 7 2019

    As long as Modi's BJP is in power Indian Economy will suffer while gullible bjp bhakts will dance.

    According to Anarock Property Consultants, there are $63 billion of stalled residential projects across India and their developers have become locked in a downward financial spiral.

    Real estate is a sitting duck, the slowdown has hit the real estate market quite hard. The industry can’t service interest, new interest, additional interest, because there is no cash flow.

    DisAgree Agree [2] Reply Report Abuse

  • Daniel, Mangalore

    Mon, Oct 7 2019

    This is good sign with present Governments tenure the real estate is steady and also not in demand unlike Exhorbitant rates and hype!!!
    basic services shall be reasonable with strictly as per Govt. rates and housing not to be considered as investment on business basis.

    DisAgree [1] Agree [1] Reply Report Abuse

  • G R PRABHUJI, Mangalore

    Mon, Oct 7 2019

    This Government is making citizens fools by reducing intrest rates and push the buyers in loan trap. Once one jumped in this trap means his end will come. Market is so shaky that , repaying the loan is difficult.

    DisAgree Agree [5] Reply Report Abuse

  • Alex, Mangalore

    Mon, Oct 7 2019

    There wont be any such upturn demand in Real Estate for the next quarter century at least.
    The supply demand has gone over the limits and by the time the existing properties are due for demolition or collapse owing to aging in 25 years or 30 years, there might be a chance for the demand to pick up for the new ones, those are in the process of construction at that time.
    Until then all builders have to stop construction or at least reduce the activity drastically.

    Currently the rental activity seems to be finding favours because of the incometax rebate on the rent paid. Where as the owners have to pay large maintenance charges every month, so I dont find any benefit for the owners.

    DisAgree Agree [2] Reply Report Abuse

  • Sukanya, Mangalore

    Sun, Oct 6 2019

    But where is the money? You think people are dumb enough to buy property in today's economy? The builders have had their fun looting the public at exorbitant prices, the government too has had a lot of fun with LTCG.. And now you want growth in property prices. Public has no money left.. Most of it has gone to build toilets. And the rest for pumpwell flyover.

    DisAgree Agree [18] Reply Report Abuse

  • VISHUKIRAN, Kalasa

    Sun, Oct 6 2019

    This economic slowdown will take at least 2 years to come back to normal and that is also no guarantee. Hope real estate shows at least a little improvement

    DisAgree [2] Agree [6] Reply Report Abuse

  • Jossey Saldanha, Atlanta

    Sun, Oct 6 2019

    We don't want any more Suicide's ...

    DisAgree [2] Agree [7] Reply Report Abuse

  • Vijay, Atlanta, mumbai

    Sun, Oct 6 2019

    It's all fake statement from developers. U till modi is pm. India will never back its economy status.
    HE done miserable things. So achhe din kabi nahin AYENGE.

    DisAgree [1] Agree [17] Reply Report Abuse


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