The Hindu Business Line : Real estate prices may soften: Parekh

Mumbai, June 27 Real estate prices will see a correction from the current high levels while interest rates remain stable for the balance of the year, according to Mr. Deepak Parekh, Chairman, Housing Development Corporation Ltd.

“I see softening of real estate prices in Whitefield, (Bangalore), in Gurgaon and in parts of the country where a lot of construction is happening,” said Mr Parekh, at the company’s AGM here on Wednesday. Speculators, who typically move in when the market is on an upswing, have moved out of the market.

“We see actual users coming in now. We don’t see a crash, but there will be a correction.” “Builders are resisting,” he added. But many builders are giving freebies, offering free air-conditioning or interior facilities or even paying a few initial EMIs for their customers. “And this is a prelude to price reduction.”

Interest rates are likely to remain stable what with inflation having come down. Even if they do move up, it will be by a marginal 25 basis points or so, said Mr Parekh.

HDFC is extending its monsoon offer (of loans at a 25 basis point discount) up to the festival season that starts in August-September, he said.

HDFC will, over the next four to six weeks, find a partner for its general insurance business to replace Chubb Global with whom it recently parted ways. “We are talking to three or four large global majors,” said Mr Parekh.

Standard Life, which currently owns 18 per cent stake in HDFC Standard Life, can increase its stake to 26 per cent at a price based on the investment made by HDFC in the venture plus the return on equity (in this case 31 per cent).

HDFC, which is making a preferential allotment of shares to Citigroup and Carlyle Group to raise Rs 3,110 crore, will invest Rs 1,390 crore of this in HDFC Bank to maintain its stake.

It will invest Rs 400-Rs 500 crore in the life insurance business

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