Real estates bide time

The market, he adds, is looking for clarity on issues like foreign direct investment in real estate and retail as well as the government’s stand on a proposal to lower the 100 acre minimum stipulation for township development by foreign companies. Chakrabarti believes that policies pertaining especially to the IT, ITES and retail sectors could have a significant impact on the market. He is also looking forward to greater clarity on the impetus to be provided to manufacturing, as industrial land demand could perk up after many years.

On the housing side, both Verma and Chakrabarti see consumption led growth ensuring firm capital values. Interest rates and a change in the tax sops are the only two factors that could derail the housing engine. C.V. Rao, regional business head, ICICI Home Finance, does not see any significant change in rates over the next 4-5 months, even as he sees the home finance segment growing at 20%.

Given the uncertainty, though, he indicates that the savvy — corporate and high-networth — borrowers are increasingly opting for fixed rate loans. Verma does not perceive interest rates as a major risk today. He argues, “Even after accounting for global pressures, interest rates should not move up more than 100 basis points (1 pc). This will have only a marginal impact given the huge demand for housing’’.

As regards tax sops, Chakrabarti believes this could deal a big blow. Verma suggests that even if a need for revamp is felt it should be done slabwises — based on variables like the property price and income level of the home buyer.