Real estate in times of Coronavirus outbreak; how RBI rate cut wouldn’t have mattered much

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Published: March 17, 2020 1:46:48 PM

A move by the RBI to cut interest rates as an emergency measure to boost liquidity amid Coronavirus scare wouldn’t have helped much to boost the real estate sector, said analysts.

real estate, real estate in India, NRI, NRI investment in real estate, RERA, affordability, Global UncertaintyOn March 16, 2020, the RBI announced two liquidity measures including another rupee-dollar swap to prevent any undue volatility in the exchange rate.

A move by the RBI to cut interest rates as an emergency measure to boost liquidity amid Coronavirus scare wouldn’t have helped much to boost the real estate sector, said analysts. While rate cut would have done little to help, the housing sector, as of now, is expected to defer launches and wait to see how the situation evolves over time, Anuj Puri, Chairman, ANAROCK Property Consultants, said.

“A rate cut could have addressed overall liquidity concerns to some extent, but many developers will keep new launches on hold. Construction activity may also take a hit if the situation becomes worse. Rate cut or no rate cut, the upcoming festivals of Gudi Padwa, Ugadi and Akshaya Tritiya will see a low momentum of new launches”, Anuj Puri, Chairman, ANAROCK Property Consultants, said. The RBI’s conservative stance is measured and prudent”, Anuj Puri added.

On March 16, 2020, the RBI announced two liquidity measures including another rupee-dollar swap to prevent any undue volatility in the exchange rate and additional LTRO to the extent of Rs 1 lakh crore to address any sudden liquidity requirements in the banking system.

Also read: RBI didn’t announce a rate cut but provides liquidity relief amid Coronavirus scare; is it enough?

“The RBI Governor said that the RBI has been taking some calibrated measures to ensure financial markets and institutions remain sound and resilient and keep domestic liquidity position comfortable. So, India Inc. will wait for the ‘right timing’ and quick action by the RBI, with the added hope that it is taken at an ‘optimum response’ point of time”, Niranjan Hiranandani, President, Assocham & NAREDCO.

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