DLF chief: RBI policy inimical to real estate sector

DLF chairman K.P. Singh said on Tuesday that high lending rates triggered by Reserve Bank’s tight monetary policy has effected real estate demand in the country but he hoped that demand will surge again once rates dip. Mr Singh said that RBI has been framing its credit policy with over focus on containing inflation, totally ignoring its adverse consequences on real estate and thus the policy is proving to be inimical to real estate growth.
Although, the demand for property purchases was very much there, today affordability has come into question, said the DLF Chairman. "Because of mortgage rate and monetary policy, there is no doubt that the market has got subdued temporarily," said Mr Singh, while releasing the Assocham study on ‘Reality Check on Real Estate’. "I am sure once the interest rates drop, demand will pick up," he said.
He said that government should get out of the business of infrastructure building and leave it to the private sector to spur up growth in the property businesses just as it played a role of facilitator in telecommunication a couple of years ago. Videocon chairman Venugopal N. Dhoot said that even as default rates on instalment payment of home loans have risen around 4.5 per cent, the Indian real estate market is likely to be $ 90 billion by 2015 as demand for commercial and residential property is surpassing supplies. The Indian real estate market presently is estimated at $ 14 billion. He said that the real estate sector is growing at 30 per cent and $ 10 billion worth of investment is expected to flow into the sector by end of the year 2008.