With the proposed Real Estate Regulatory Bill, where developers are expected to keep considerable portion of sales in escrow account for a majority of the construction period, finance cost for developers is expected to increase, according to Anuj Puri, Chairman and Country Head, Jones Lang LaSalle India.
This, along with the increase in cost of construction and the already challenging economic scenario, is expected to affect the profit margins of developers, In such a scenario, the real estate industry is obviously hoping for relief from RBI by way of reduction in financing cost, he said in a statement.
With RBI increasing the repo rate by 25 basis points, this will increase the borrowing cost, he felt.
“While the real estate industry has reason to be somewhat disappointed on the increase in borrowing cost, the RBI has made provisions for increased liquidity in the system. Considering the current economic situation, I believe that the new RBI Governor has acted suitably with this monetary policy,” he said.