The realty developer community has heaved a sigh of relief with Thursday’s rate cut by the Reserve Bank of India.
Property developers across the country have been struggling with falling home sales and high cost of borrowing.
“It (rate cut) is a confidence booster for the home buyer and lead to more launches and completion of projects,” said Rajeev Talwar, ED, DLF, the largest property developer in the country.
Demand for residential spaces in 2014 remained mostly subdued in 2014 due to high prices and interest rates.
The real estate inventory — the number of months required to clear the existing stock at the prevalent absorption rate — during January to September rose to 83 months in the NCR(national capital region) and 50 months in MMR (Mumbai Metropolitan Region).
“Given the current market situation, this reduction in the base rate is an important step in improving home buyer sentiments, and hopefully, with expected reduction in mortgage rates, will improve residential sales across the country, which have been suffering from general slackness in recent times,” said Anshuman Magazine, chairman of CBRE South Asia.
A Mumbai based debeveloper Dosti group on Thursday launched a special scheme today which offers interest rate of 7.99 per cent for its home buyers, who have taken loans at a rate of upto 10.50 per cent, in select projects.
The developer will reimburse the amount beyond 7.99 per cent for the first three years of booking of the apartment and the if the rates go beyond 10.50 per cent, it will reimburse the increased amount also, it said.
However, Confederation of Real Estate Developers Association of India (CREDAI) chief Lalit Kumar Jain termed the cut as “Not Enough”. Jain called for a roll back of all liquidity tightening measures and easing the situation to make cost of funding for both home buyers and developers cheaper than what it is today.
A reduction of 200 basis points (reduction of interest rate by 2%) within short span is needed., he said.