Tuesday, February 8, 2011

Onion soup for the soul (of real estate developers)

With food inflation at double digits, RBI has acted. Now with higher interest rates to curb food inflation (which actually was a result of hoarding /artificial supply constraint), the entire country will pay. Real estate prices are expected to slacken, demand expected to slow. Coupled with rising oil prices, these factors give the perfect recipe for FIIs to sell emerging markets where interest rates will have to be increased to fight inflation. All because of the food mafia ! They have brought the real estate gods on their knees.