Mr Deepak Parekh

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Mumbai, July 16 Property prices, barring certain areas in big metros, may witness further correction in the near future.

The smaller pockets have already seen a 15-20 per cent decline in the recent past, according to Mr Deepak Parekh, Chairman, HDFC Ltd.

Some areas in cities such as Mumbai and Delhi may not see a drop in prices because there is a huge demand for property from multinational companies, but suburbs and smaller cities have already seen a declining trend.

Addressing the annual general meeting of HDFC here on Wednesday, Mr Parekh said purchasing real estate is not an attractive investment option now. But he does not expect a slowdown in housing demand, as there is a huge demand for housing in the country.

Mr Parekh also dismissed reports about defaults by big builders, but said that some big deals could collapse as builders had committed to buying land at high prices, which no longer seem profitable. There have been some cancellations of large deals recently.

He said HDFC is expected to register a 25-30 per cent growth in loan disbursements in the current year.

Responding to a query on interest rate hike, Mr Parekh said a further revision of lending rates would be subject to the Reserve Bank of India hiking rates in its forthcoming credit policy. A hike in the rate would also depend on the cost of funds, he added.

HDFC had increased lending rates by 75 basis points for individual borrowers and by 125 basis points for corporate lending from July 1.

Answering queries from reporters in the sidelines of the AGM, Mr Parekh denied reports about Citi Group selling its stake in HDFC.

Citi, which holds 11.74 per cent stake in HDFC, is the single largest shareholder in the company. “I have talked to Citi officials and they said they are not selling it now.” But many investors have shown interest in picking up stake in HDFC, following media reports about a likely stake sale, he added.

Rumours of Citi Group selling its stake in HDFC followed reports of the group selling a number of its non-core assets globally.

Citi’s 11.74 per cent stake would be worth Rs 5,500-6,000 crore based on current prices. Mr Parekh also assured shareholders that in case a stake sale takes place, HDFC would ensure that the stake is distributed among two to three institutional investors, rather than a single investor.

Commenting on the economic growth, Mr Parekh said that he expects a growth of 7-7.5 per cent in the current fiscal, in view of rising inflation and oil prices.

With supply side improvements, especially in the agricultural sector, prices could come down, he added.

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