Tuesday, July 27, 2010

Home and Auto Loans to get Dearer – RBI Hikes Interest Rates to Tame Inflation!

Winding the coil and unwind it! – thats what RBI seems to have done better than most other Central banks world over since the start of the global recession. In fact, RBI has gone one step further and announced that it will come out with more frequent mid-quarterly monetary reviews, on the lines of the major central banks abroad, for swifter monetary actions in sync with changing economic conditions.

In its first quarterly review of the monetary policy, RBI today increased both the short-term lending to 5.75% and borrowing rates to 4.50% from the immediate effect. However, the apex bank has kept the Cash Reserve Ratio unchanged at 6% on account of tightness of liquidity in the system.image

At the same time, the RBI’s move to up short-term rates may also hinder industrial growth – particularly the manufacturing sector – as interest rates move northwards. The RBI has also revised growth forecast at 8.5% for 2010-11.

The RBI has raised its key policy rates for the fourth time this year, in its effort to unwind the stimulus measures offered during the global slowdown, by relaxing the interest rate burden and providing boost to the consumption in the economy. This forceful hike also comes on the back of stubbornly-held double-digit inflation (10.55% in June).

The RBI has hiked the repo rate – the rate at which banks borrow from the RBI – by 25 basis points. However, an up-tick of 50 basis points in the reverse repo rate – the rate at which banks lend to the RBI – has been above analyst’s expectations who had expected a 25 basis point increase in this key policy rate.

The central bank has raised its projection for the headline inflation for March end to 6% from 5.5% as forecasted earlier. With robust rebound in the real economy, the RBI has felt the need to sync the policy rates with the current market conditions and ensure price stability necessary to support this much-needed high growth.

With as many as four hikes in this year, aimed at taming inflation, the fears about bank funds getting costlier could well trickle down into the real economy in the form of costlier as well as reduced lending opportunities to the industry.

Wednesday, July 14, 2010


The concept of affordable homes came into existence after the recession that hit real estate industry in 2008. From the beginning of 2000, a house meant stretching resources to the maximum due to the IT driven property boom. Since many people could not afford the sky-rocketing prices, they were left out of league.

Although property prices were comparatively lower at the outskirts but buying there was not considered wise since the connectivity was inadequate.

After some years came the 2008 recession. The lapse of the IT sector which resulted in job uncertainty all around hit the realty sector, in the very similar manner as it did to many others.

Then the realty market which was much affected by the IT sector went under a price correction. With this correction came the new concept of Affordable Homes.

Monday, July 5, 2010

Home prices to go up by 2.5pc as service tax kicks in . . .

   Home prices will increase by about 2.5 percent with the  implementation of service tax on the residential segment with  effect from today, a leading property consultant said.

   “The implementation of service tax on residential properties  will result in an increase in the price of homes for end-consumers. Developers will justifiably be unwilling to  absorb this new tax burden and naturally pass it onto the  buyers,” Jones Lang LaSalle Meghraj senior vice-president for  capital markets Gautam Hora said.

   “The increase would be to the tune of 2.58 percent. Following this, overall demand and sales of residentialproperties will take a significant hit in all cities,” Hora  added.

   In the budget 2010-11, Finance Minister Pranab Mukherjee had  brought in real estate complexes under the ambit of service tax,  unless the entire consideration for the property is paid after  completion of construction.

Friday, July 2, 2010

Overview on Indian Real Estate Scenario

The flexible nature of the Indian real estate has earned its appreciated value over time. In fact, the rapid growth of the Indian realty market has enhanced aspirations for good standard of living. The present scenario of India has changed the way we live, from working style to recreation.

The major factors behind the rapid growth of the real estate are the relaxed policies taken up by the Indian Government on Foreign Direct Investment. The reform measures initiating strong economic development and the easy home loan terms and conditions, followed by increase in income levels, purchasing capacity and urbanization have expanded and shaped the current Indian Real Estate Scenario. Let us take a look at the factors in detail that has boosted the growth of the property market.

Factors behind the Growth of Indian Real Estate

  • The FDI policies of the government encourage increasing number of foreign countries to invest in Indian properties. India has replaced US and ranks second most preferred location for real estate investment. During the period of 2004-05 US$ India attracted over 2.38 billion while in the first half of 2005-06 fiscal the nation had over 3 times of the foreign direct investment at US$ 7.96 billion. In has now become one of the dominant host countries for FDI in Asia and Pacific (APAC).

  • The positive reforms implemented by the government has also initiated the growth. The real estate has grown so vast that the industry has turned out to be the second most employer after agriculture. Real estate of all forms ranging from residential, retail to commercial are being developed in full scale in cities like Mumbai, Delhi NCR, Kolkata, Chennai and many others.

  • It is estimated that India would be producing about 2 million graduates in the ensuing years that would cause demand for 100 million square feet of office and industrial space.

  • The presence of world renowned Fortune 500 companies further attract other major companies to establish their operational base in the country, hence generating demand for corporate spaces.

Thursday, July 1, 2010

Real estate sector picking up: Industry body

he real estate sector is picking up after the slump witnessed during the global economic meltdown, an industry body said on Monday.
"In Chennai alone, in the whole of last year the total occupancy level was 2.6 million square feet. But in the last six months, we had crossed 2 million square feet of occupancy, which shows a rapid growth," National Association of Realtors Committee's media head Ramesh Nair said.
Demand has been growing at a decent rate and the property consultancy industry has tremendously evolved in the last 15 years, said Nair, who is also the managing director of the city-based real estate developer Jones Lang La Salle.
In view of this, the association, which represents over 1.2 million real estate agents spread across the country, will conduct its second edition of two-day seminar on 'NAR-India 2010' here from July 16, he said.
"The objective of the seminar is to educate the members of association on the latest trends in the real estate sector and to streamline the sector that is largely unorganised... This seminar will also help us to network with each other,"
NAR India 2010 chairman C Suresh Reddy said. He said over 500 delegates, including some from overseas, are expected to participate in the two-day seminar.