Hardening Interest Rates Could Jeoperdise Real Estate Prospects- Fitch

January 28, 2010	(Be the first to rate this story!)  Loading ...
Print This Story   Email This Story Subscribe Newsletter

The global rating agency Fitch on Wednesday warned that hardening of interest rates could jeopardise the prospects of the real estate sector in the coming months. “Any significant increase in property prices and a tightening monetary policy, could have an adverse impact on the future demand,” Fitch said in a report on the domestic realty market, two days ahead of the Reserve Bank’s monetary policy review.

The apex bank is slated to announce the third quarterly credit policy on Friday, in which it is expected to strike a balance between the conflicting needs of contain inflation and promoting growth. The RBI had in its half-yearly review of the monetary policy raised the standard asset provisioning requirements for banks from 0.4 per cent to 1 per cent.

The Fitch report also said affordable homes would drive the housing sector in the coming months, while the commercial real estate will have to wait for some more time for recovery. “The affordable entry segment should continue as the primary growth driver in the Indian residential sector for 2010,” the rating agency said.

“The commercial segment continues to remain under pressure. We expect demand for commercial space to improve in the second half consequent to the expected resumption of hiring in key sectors like IT/ITeS and financial services,” Fitch added. The rating agency said as retailers move back into the expansion mode, there could be a pick up in volume and rents to stablise in the second half of the year.

News Published Under:   Real Estate India |

Comments