Rise in interest rate will cripple the real estate sector

“The rising inflation, the rise in interest rate and the global economy slowdown has already taken a toll on the real-estate sector. Any further rise in interest rate will further cripple the sector. As per urbanization report, there is a major shortage of apartments which are required in urban areas in India. Still one can notice that there has been a 20 to 25% decline in registration in Mumbai alone. The transactions have slowed down. The rise in interest rates increases the cost of capital for the developer and for the buyer. Thus it is a double burden on the end user as the developer also has to pass on the cost to the end user.
When transaction slows down and the cost of capital increases the developers also have no choice but to differ plans to launch new projects. As real-estate projects have a two to three years construction cycle, the impact of such policies have not just a short term but a long term impact on the overall market scenario”, said Mr. Babulal Varma, Managing Director, Omkar Realtors & Developers Pvt. Ltd.