Wednesday, October 8, 2008

CRR cut provides hope to real estate developers

The big worry remains home loan rates. As of now, banks have not announced rate cuts and once they do it, it bring cheer among real estate players.


Monday's cash reserve ratio cut has brought some respite for real estate developers. They are hoping banks will relent, loosen their purse strings a little and bail them out of the cash crunch they are currently stuck in.
CNBC-TV18’s Priyanka Ghosh
spoke to leading developers and reports if they are hoping things to improve.

Real Estate Slow Down:

For the past 10 months, funds had almost dried up for real estate developers. Over the previous year, realty stocks have nosedived, PE funding has not come forth and there were repeated interest rate hikes. Then, construction costs rose 20% and average sales dropped by 30%. The CRR cut will give some respite from the credit squeeze

Niranjan Hiranandani:

Niranjan Hiranandani, Managing Director, Hiranandani Constructions, said, “The impact on the real estate sector would be positive except that we have not seen the benefit percolating into the industry. Because of more money now with the banks by virtue of the CRR cut, we expect there will be more funds available to the real estate industry.”

Pujit Agarwal:

Pujit Agarwal, Managing Director, Orbit Corp, said, “The tightening measures which the RBI had initiated squeezed out liquidity so much so that we have heard stories where"

Pradeep Jain:

Pradeep Jain, Managing Director, Parsvnath Developers, said, “The home loan rate is bound to be cut down,” adding that the government is focussing towards infrastructure, mass housing and affordable housing — mainly homebuyers who will take mortgage to the tune of Rs 60-70 lakh and below for properties. “And to cut the CRR and to cut the repo rate is to give comfortable loans to home buyers,” said Jain.

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Related Stories:

1) RBI taking steps to ease the liquidity crunch, home borrowers may get 25-50 basis points relief from high interest rates in the short term

2) To know whether your EMI will come down watch out for RBI's credit policy on October 24. There could be a Diwali gift for you.

3) RBI addresses the last factor that has been exerting upward pressure on home loans interest rates - reduces CRR to impart liquidity

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