Housing demand to be hit on rate hike: CBRE

Housing demand will be affected if there is further increase in the interest rates for home loans and property prices, a top official of global realty consultant CB Richard Ellis (CBRE) said today.

"The residential sector is doing fairly well at the moment. There is good end-user demand," CBRE South Asia Chairman and Managing Director Anshuman Magazine said on the sidelines of a CII realty conference.

He, however, noted that "there is a possibility that housing demand will be impacted if there is further rise in interests rate on home loans or property prices".

The Reserve Bank of India (RBI) has increased the key policy rates nine times since March 2010, which has resulted in hardening of interest rates on home loans by about 4%.

The apex bank is expected to further hike the policy rates in its upcoming mid-quarterly review on June 16 as inflation is still on the higher side.

On the office segment, Magazine said demand has picked up after the slowdown in 2008-09 and spaces are being absorbed.

"Corporates are expanding. Job market is also good and people are getting hikes and bonuses. So, office spaces are getting absorbed," he said.

Earlier speaking at the conference, Magazine said the infrastructure needs to be improved in an urgent manner to tackle rapid urbanisation. He stressed on the need to tap institutional investors in real estate.

India Infrastructure Finance Company Chief Executive Officer Pradeep Kumar asked the real estate developers to take care of environment and natural resources while executing projects. He also urged the developers to focus on affordable housing where there is maximum demand.