Monday, December 15, 2008

Real estate developers will have to be realistic about the situation and bring prices down

"The bubble has gone bust in this sector. There is a slowdown in the global economy. Realtors cannot expect to maintain profit margins of the boom era. They will have to cut prices and set realistic targets for the future"

Not in metros, may be in tier II / III cities:

The real estate sector is unlikely to see any movement even after measures like bringing Rs 20 lakh and below loans under the priority sector. However, it will trigger demand in the tier II and tier III cities.

Though much activity is not expected in Mumbai and Delhi, suburbs like Thane, Virar, Vashai and Panvel will see movement in the housing sector.

End-users x investors:

The reason for demand to pick up in these cities is that here most of the buyers are end-users and hence genuine buyers, whereas in major metros investors majorly drive the demand.

For the demand to start picking up in metros a price cut for the properties is essential.

Interest rate 6% to 7%

Currently the interest rate of the priority sector hovers around 9% to 10%. PSU banks are likely bring it down by 2% to 3%. Banks are even looking at waiving off processing fees and reducing money margins.

Developers also think a further reduction in home loans to 6% to 7% for the priority sector is going to trigger demand.

No Private Equity:

With banks being more apprehensive about lending to this sector and chances of PE deals happening in the near future being equally grim With banks being more apprehensive about lending to this sector and chances of PE deals happening in the near future being equally grim, industry experts feel that developers will have to be realistic about the situation and bring prices down to drive demand.
To read more, please, visit - Cheaper home loans may not cheer realty sector - Kakoly Chatterjee

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1 comment:

  1. Ravi,

    The developers dont want to cut their profit margins which is as higher as 70-80% but want govt to support them. Totally baseless ...

    Why they go crying for help to the govt.If they cannot sustain then close business and do something else.They simply want govt shoudl help them which is so unprofessional.Have you seen any builder/developer on two wheeler : No . They all have big cars and earn huge money from middle income group people.Try to create problem in everything they do and make life miserable. But they want govt should help them.

    ReplyDelete