RBI move likely to pep up realtors’ bottomline

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New Delhi, Nov 2: over the current situation is developing residential spaces in the mid income segment. They are also ensuring that there are consumers for the projects they are developing. For biggies like DLF and Unitech mid segment housing is in the range of Rs 40 lakh to Rs 60 lakh, while for Omaxe and BPTP it is in the range of Rs 20 lakh to Rs 25 lakh.

Rajiv Singh, vice chairman, DLF, said, “We are looking at conserving and enhancing liquidity rather than retrenchment. We have no plan to buy land. Our borrowing costs have increased to 16% from 12% a year ago.”

DLF will continue to buy back shares. It also has plans to use its surplus in the best possible way. DLF has a debt of Rs 14,000 crore on its balance sheet. However it has a healthy debt equity ratio of 0.6%

Singh wants a sharp and significant reduction in interest rates. He wants a level playing field for real estate where the risk weightage should remain the same.

Although IDBI Bank responded immediately after RBI announced a slash in key interest rates by reducing its home loan rates by half a percentage point to 11% other banks are still assessing the situation.

Renu Karnad, joint managing director, HDFC ltd, said, “Earlier when RBI reduced its interest rates our cost of funds did not change. We will see what kind of business sense it makes for us before we make any rate cuts.”

Shobhit Agarwal, joint MD, Jones Lang Lasalle Meghraj, said, companies are taking a lot of measures to protect their margins from being hit by the slowdown. “The focus of realty firms has shifted from large products like big office buildings and high residential buildings.”

Agarwal points out that utility with quality is the new focus. As a result, “budget apartment” is the new focus. Agarwal specified, the word “budget” should not be misleading. It does not denote a particular segment or price range in the housing sector.

Previously people bought residential spaces driven by their aspiration level and not by their pocket size. As the heat of the global slowdown is being felt in India, consumers have become more realistic and buying houses, which is apt for the size of their pockets.