DLF reports marginal drop in quarterly earnings

While reporting a marginal drop in its quarterly earnings, leading real estate major DLF voiced its concern about rising interest rates which it said could affect demand. In the last 18 months Mumbai and Delhi have witnessed a jump in property prices which have more than doubled. Rising incomes and a strong stock market have been responsible for this spurt. However the volume of sales has gone down. Since a year ago sales volumes are down by a third. Property buyers are deterred by high prices and rising borrowing costs.

DLF reported a net profit of 4.66 billion rupees ($102 million) during its third-quarter fiscal which ended in December. A year ago this figure stood at 4.68 billion rupees. Even revenues rose to 25.94 billion rupees from 21.51 billion indicating a rise of 21%. Interest rates were raised for the seventh time since March by the Reserve Bank of India. This was done to curb inflation which has become stubbornly high. According to bank sources mortgage rates may increase reaching up to double-digits. Last year loan rules were tightened by RBI. Mortgage firms were asked by the central bank to go for loan limitation (80 percent of asset value). DLF stated that with inflation and inadequate supply measures mere dependence on monetary policies will only lead to a slowdown in economic growth.