Arvind Jain, Managing Director – Pride Group
We real estate sector was cheered by the recent cut in interest rates, but it was by itself not sufficient to amount to any real advantage to home buyers. The Union budget should bring a significant decrease in interest rates on home loans. The Ministry for Urban Development and Housing had made it clear that it would maintain a sharp focus on reducing home loan interest rates, and the budget will hopefully bring firm evidence of this focus. Developers, home buyers and banks are all keenly awaiting such an announcement, which would bring with it a significant revival in sentiment.
Also, the budget needs to do something to bring down the cost of borrowing for developers, because raising capital for development of new projects remains a huge challenge. Lending rates for real estate development currently range between 12-14%, and raising funds through other sources is even more expensive. The interest rates on lending to real estate developers should be brought down so as to help rationalize the cost of construction. This would also help in bringing down property prices.