Saturday, January 3, 2009

Credit flow to developers - RBI's interest rate cuts and the fiscal stimulus package do little to address the realty sector’s main source of trouble

"Rate cuts will definitely have positive impact on demand for homes.
RBI’s actions in the past have eased liquidity in the system,
but credit flow to developers still remains an issue," says Kumar Gera, chairman, Gera Developers and
the chief of real estate industry body Credai.
The real estate sector has been in the grips of a sharp slowdown since the beginning of last year, with sales having fallen drastically in the last quarter.

Lower sales hit developers’ cashflows,
while unavailability of bank credit and funds from private equity squeezed them further,
forcing most of them to delay projects and
lay off employees.

The realty sector is a big employer and a key source of demand in a variety of other sectors, and the government has been keen to lift this industry to spearhead a wider economic recovery.

The RBI has repeatedly cut CRR and key rates in the past two months, but banks have not been very forthcoming in lending to developers because of the high risk perception of the sector. This is because several housebuilders find difficult to service debt and pay for the land already acquired amid slowing sales.
To read more, please, visit - The Economic Times

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2) RBI cuts key rates to stimulate economy

3) Economists see robust growth in FY09

4) Return of animal spirits

5) Overseas funding to boost real estate

6) Indian Real Estate Developers to meet the RBI Governor to demand more sops for the struggling real estate sector

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