1. RBI monetary policy August 2017: Developers feel rate cut positive for real estate

RBI monetary policy August 2017: Developers feel rate cut positive for real estate

Cheaper loans for home buyers will promote a renewed interest in residential property purchase from end users and investors.

By: | Updated: August 3, 2017 1:43 PM
RBI monetary policy August 2017, rate cut, positive, real estate, developers, RERA, GST, cheap home loan Cheaper loans for home buyers will promote a renewed interest in residential property purchase from end users and investors.

The Reserve Bank of India on Wednesday cut the repo rate by 0.25 basis points to 6% as anticipated, which is the lowest in six-and-a-half years since November 2010. With the cut in the repo rate and given the liquidity situation prevailing in the market post demonetization, there is scope for banks to cut their lending rates further.

Developers feel that the rate cut to 6% was on expected lines given the low inflation levels in the economy. Many of them had hoped for a 50 bps cut as good monsoons, favorable global environment and new reforms provided the perfect platform to aggressively cut rates. However, it seems that the governor wants to look closely at the impact of the recent economic policies before trimming rates further.

One of the key points highlighted by the RBI included speedier clearance for projects which has been a long-standing demand of the industry. “We need to remember that deregulation will be the key to the success of various government initiatives in the future. A major impediment to real estate development in India remains the approval process. We are ranked at 185 out of 187 countries by the World Band for Ease of obtaining Construction Permits. It effectively means that we are in the same club as war-torn countries where institutions have collapsed and offices which accord approval have been bombed to rubble. The government must look at addressing the shortcomings plaguing the real estate sector at the earliest if it wants to realize the dream of our Prime Minister of Housing for All by 2022,” said Surendra Hiranandani, Chairman & MD, House of Hiranandani.

Experts feel that while the demand for real estate in India remains huge, actual consumption has remained sluggish. Given the liquidity situation prevailing in the market post demonetization, there is scope for banks to cut their lending rate further. The amalgamation of lower interest rates coupled with various progressive measures taken by the government will hopefully help buyers ahead of the festive season.

Here’s what developers said on the rate cut:

Pankaj Bansal, Director, M3M Group: RBI’s decision to lower the repo rate is on expected lines. Inflation is at its lowest in five years and economic growth is picking up. This revision will positively impact the sentiments surrounding the real estate sector. Banks will now be able to offer loans at more attractive rates. Cheaper loans for home buyers will promote a renewed interest in residential property purchase from end users and investors. The cost of funding for real estate developers should also now reduce. Overall, this move definitely indicates a positive direction for the economy in general and therefore also for the real estate sector, as its performance is directly linked to the basic economic fundamentals.

Pradeep Aggarwal, Co-Founder & Chairman, Signature Global: Implementation of GST has completed its very first month and a great response can already be observed as buyers’ queries are increasing day by day. This rate cut has come at a time when GST and RERA have entered into a settled phase and the sector is observing a transition where buyers are increasing their activities and developers are eagerly waiting to satisfy the demand. This can give a major boost in the affordable housing segment.

Piyush Sharma, CEO, Sikka Group: The 25 bps rate cut has actually come at the right time. With RERA and GST already in place and the buyer confidence building up, this can surely boost the sentiments. Though the cuts by the central bank are yet to be reflected in the lending rate cuts by banks, but still this is a positive step.

Abhishek Bansal, Executive Director, Pacific Group: Inflation has come down significantly over the past two quarters. The stock market, on the other hand, is touching greater heights. Today’s rate cut will only add more weight to the sentiments and push the customers to invest, as a result of which the real estate sector will greatly benefit. As GST is settling down and RERA is gaining momentum, the real estate sector is projected to become the investment hub very soon.

Avneesh Sood, Director, Eros Group: GST has been implementation and buyers’ queries are increasing day by day. A rate cut at this moment will boost these sentiments further where footfalls and conversions are bound to increase. The festive season of this calendar year is fast approaching and this rate cut can allow the banks to cut down on their lending rates further.

Gaurav Gupta, General Secretary CREDAI-RNE & Director, SG Estates: A reduction in the repo rate, happening after October 2016, will push the banks to further reduce the lending rates. With transparency increasing in the sector, the low pricing factor will help boost the property demand and further clear the inventory in macro regions.

Deepak Kapoor, President CREDAI-Western UP & Director, Gulshan Homz: The realty sector welcomes the repo rate cut by RBI today which is further expected to fuel the demand as the EMIs are expected to fall even more. This rate cut has come at a time when GST and RERA have entered into a settled phase and the sector is observing a transition where buyers are increasing their activity and developers are eagerly waiting to satisfy the demand. GST’s input tax credit feature coupled with lowered EMIs will further reduce the burden off the buyers and pave the way for a strong demand-supply matrix in the sector.

Rakesh Yadav, Chairman, Antriksh India Group: The sector was hopeful for a rate cut today and after almost 9 months, the RBI has decreased the key rate by 25 basis points. Banks must follow suit in order to pass on the benefit to the customers.

Vineet Relia, Managing Director, SARE Homes: The RBI has taken a positive step by offering a 25 bps reduction in the repo rate which will act as a catalyst for investment revival, going hand in hand with favorable government measures like RERA and GST which will boost housing demand, benefiting both developers and buyers. This will also impact the economy positively and give a much-needed credit flow.

Ravish Kapoor, Director, Elan Group: We appreciate the decision for reduction in the repo rate as this would boost the liquidity in the system. Easing interest rate will help revive the real estate sector, which is profoundly sensitive to interest rate movement.

Ssumit Berry, Managing Director, BDI Group: The RBI’s decision to reduce the repo rate will surely improve the economy. The lowering of the repo rate will spur growth of the real estate sector with sentiments of buyers turning favorable. This will ensure uplifted property demand in the near future and also boost the affordable housing segment.

Rahul Singla, Director, Mapsko: With the RBI’s decision of offering reduction in the repo rate, we can expect a further rate cut in home loans. Reasonable loans for home buyers will give a boost to the real estate sector. Industry trends are already pitching for upward growth trajectory, companies are focusing on deliveries and liquidity of their projects, making it the right time to invest in the sector.

Amit Modi, Director, ABA Corp and Vice President CREDAI Western UP: While the rate cut is indeed a step in the right direction and also after the demonetization now banks are flush with cash and don’t have to worry about reviving their bottom lines, they should be passing the benefits of the rate cuts to the end consumers. This initiative has to be transferred to its end beneficiary for any positive effect on ground to the ongoing economic cycle as it will indeed be the single biggest factor in kick starting the economic activity in these stagnant phases.

  1. No Comments.

Go to Top