Interest rate hike beyond 150 bps will impact realty sector
With rising inflation and interest rates leading to a slackening in property demand, one to one and a half per cent increase in interest rates could further impact the real estate sector.
By PTI |
MUMBAI: With rising inflation and interest rates leading to a slackening in property demand, one to one and a half per cent increase in interest rates could further impact the real estate sector.
"The demand is already slackening. The real estate sector can absorb another 100 to 150 basis points rise in interest rates, but anything beyond that will hit the industry hard," real estate money management and services firm Jones lang LaSalle Meghraj Chairman and Country Head Anuj Puri said here.
The current trend of drop in demand would continue for another 18-24 months as there is no sign of inflation cooling down and high chance of interest rates becoming harder, he said.
Puri, however, said there was no shortage of demand in Mumbai and Delhi, but in other parts of the country far less number of property transactions are taking place.
The slackening in demand, coupled with liquidity crunch, could lead to consolidation in the realty sector as smaller players will find it difficult to survive, he said.
"Smaller players will have to partner with bigger ones or offer stakes to financial partners to complete their projects."
There is no dearth of demand for office space in the country as overseas companies are now leaning more towards India for outsourcing. As a result, even smaller cities are becoming an attractive destination, he added.
"The demand is already slackening. The real estate sector can absorb another 100 to 150 basis points rise in interest rates, but anything beyond that will hit the industry hard," real estate money management and services firm Jones lang LaSalle Meghraj Chairman and Country Head Anuj Puri said here.
The current trend of drop in demand would continue for another 18-24 months as there is no sign of inflation cooling down and high chance of interest rates becoming harder, he said.
Puri, however, said there was no shortage of demand in Mumbai and Delhi, but in other parts of the country far less number of property transactions are taking place.
The slackening in demand, coupled with liquidity crunch, could lead to consolidation in the realty sector as smaller players will find it difficult to survive, he said.
"Smaller players will have to partner with bigger ones or offer stakes to financial partners to complete their projects."
There is no dearth of demand for office space in the country as overseas companies are now leaning more towards India for outsourcing. As a result, even smaller cities are becoming an attractive destination, he added.
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