Rate cut Is Fine, itís Prices that Matter


"The industry expects more such steps to improve liquidity and reduce interest rates to increase investments," says Anshuman Magazine, CMD, CBRE South Asia, a real estate consultancy.

Fund flows to the real estate sector are drying up. The much-touted investment avenues such as real estate investment trusts and real estate private equity have not taken off as expected. Recently, the RBI said it did not favour the granting of industry status to real estate ó a key demand of the sector for that would enable funds to flow easily.

Which leaves the only avenue: the buyer who bears most of the burden of financing a project and the only channel for reliable cash flows for a developer. The rate cut would provide a marginal benefit, but can do nothing to address the core issue: high prices.

"A sharp revival in the fortunes of the industry will be accelerated if the demand resistance arising from high prices of housing can be addressed through more affordable prices," says Pranab Datta, chairman, Knight Frank India.

Until that happens, the prospective buyer may have to remain a fence sitter on the lookout for a good investment opportunity.

(With inputs from Sandeep Singh)

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