Babulal varma, MD - OMKAR realtors & Rohtas goel, CMD - Omaxe as well as President NAREDCO
The real estate industry has responded cautiously to the RBI’s recent move to hike the repo and reverse repo rates. Though, banks have not talked about immediate hike, there are fear among the real estate players that the move may result in lending rates going high which, in turn, may impact the demand for housing sector.
The apex bank, in its first quarter review of the monetary policy, hiked the repo rate by 25 to 5.75% and reverse repo rates by 50 basis points to 4.50%. However, the cash reserve ratio (CRR) has been left unchanged at 6%. “The hike has come at a time when the realty sector has managed to find its feet after going through turbulent times during the recession last year.
A further hike will lead to lending to real estate companies at even higher rates. This could lead to margins being put under pressure and being an impediment to the growth of the real estate industry,” said Babulal Varma, Managing Director, Omkar Realtors & Developers Pvt Ltd.
Rohtas Goel, CMD, Omaxe Ltd agreed that the realty sector is reeling under paucity of funds, and prices have been showing an upward trend. “It will help the realty sector only if the current interest rates for retail loans are maintained. This is the fourth time that apex bank has increased the rep rate and subsequently each time, the interest rates have also been increased. We believe that any further increase in the interest rates may lead to downtrend in the over-all demand,” Goel added who is also the President of National Real Estate Development Council (NAREDCO).
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