Avoid realty at this point of time: Elara Capital

With interest rates hardening, the funds flowing into the real estate space could become a problem, real estate IPOs have also not been getting too much of attraction. Do you think this is something that will not reflect in the stock prices? 

30% Rise in Mumbai Home Sales

Mumbai home prices have jumped about 30 percent over the past six months, leading to a drop in home sales in India’s financial capital as higher prices deter buyers, Knight Frank LLP said. “Residential property prices have risen too much too fast,” Pranay Vakil, chairman of Knight Frank (India) Pvt. said in an interview in Mumbai. “We are seeing resistance at higher prices and as a result volumes have declined.” The average sale price of existing homes between 1,000 square feet (93 square meters) and 2,000 square feet has climbed 11 percent to 20,000 ($450) a square foot in North Mumbai in the fourth quarter from the three months to Sept. 30, according to data from property consultant Cushman & Wakefield. That was the highest in at least eight quarters.

Banks likely to raise realty loan rates on real estate projects

The Reserve Bank of India (RBI) may make borrowing more expensive for builders by asking banks to set aside more capital for loans to commercial real estate projects. A higher capital requirement will force banks to raise interest rate on such loans.