Amidst swift changes in global economic undercurrents with a moderate view on global economic outlook, the Reserve Bank of India on Thursday maintained benchmark lending rates at 6.5% for the ninth consecutive time, which among others creates a stable environment for the real estate sector.
Property developers said the RBI decision to keep the repo rate unchanged is a stabilizing force in the current volatile global economic scenario. With the US recession threats hovering, the Bangladesh crisis impacting regional capital flows, and broader global economic uncertainties, steady home loan interest rates offer a semblance of predictability.
However, “stakeholders must closely monitor these geopolitical undercurrents and macroeconomic indicators to adapt their strategies effectively,” said Dr Niranjan Hiranandani, Chairman, NAREDCO.
“From a real estate standpoint, lowering the repo rate could have helped revive affordable housing, which has been negatively affected by higher interest rates. However, NRI investors, particularly, find this predictability crucial amidst fluctuating foreign exchange rates and global undercurrents. As the market remains steady, it provides fertile ground for both long-term and short-term real estate investments, but vigilance towards inflation trends, fiscal policies, and global economic developments remains imperative,” Dr Hiranandani added.
Also Read: RBI keeps repo rate unchanged at 6.5% – How can homebuyers reduce their interest burden?
With steady borrowing costs, home loans become more affordable, which is likely to boost demand in the housing market, especially during the upcoming festive season.
“This stability allows developers to plan projects confidently, knowing that financing conditions will remain favorable. The RBI’s balanced approach to economic management helps maintain market confidence, reassuring investors amidst global economic uncertainties. This period of steady rates can be leveraged by the sector to drive growth, innovation, and increased transactions, making the festive season an ideal time to capitalize on market opportunities and support economic expansion,” said G Hari Babu, National President of NAREDCO.
The following are the insights provided by prominent developers in India regarding the announcement made by the RBI’s Monetary Policy Committee on Thursday:
Aditya Kushwaha, CEO and Director, Axis Ecorp: “The RBI decision to maintain the repo rate at 6.5% for the ninth consecutive time signifies a cautious approach amidst solid economic growth and easing inflation. For the real estate sector, this stability in policy rates can bolster investor confidence and encourage homebuyers, leading to sustained demand. With inflation showing signs of easing, the cost pressures on construction materials may reduce, further supporting project viability. For NRI investors, this predictable stance is crucial, offering stability amid fluctuating foreign exchange rates and global economic uncertainties, aiding informed investment decisions in the Indian real estate market.”
Mohit Goel, Managing Director, Omaxe Group: “By keeping the repo rate unchanged at 6.5% for the ninth consecutive time, the RBI has once again demonstrated its commitment to economic stability and growth. This decision is helpful for the real estate sector, creating an environment of certainty and confidence among homebuyers and investors. It will not only support the seamless execution of ongoing projects but also encourage new investments in both residential and commercial segments. As the country continues its robust growth trajectory, this move by the RBI will help in achieving housing aspirations of New India and driving sustainable development in the real estate market.”
Avneesh Sood, Director, Eros Group: “By keeping the rate unchanged, the RBI underscores its commitment to managing price stability while supporting robust growth. This steady stance is particularly beneficial for the real estate sector, as it ensures that borrowing costs remain stable for both developers and homebuyers. Lower and predictable interest rates foster greater affordability in housing, bolster market confidence, and stimulate investment. As inflation trends show a decline and global economic conditions remain varied, this policy move provides crucial stability, enhancing predictability in the real estate market. By aligning monetary policy with growth objectives and inflation control, the RBI’s decision is poised to support continued expansion in the housing sector, offering positive prospects for future homebuyers and investors. The focus on price stability will ultimately facilitate a conducive environment for sustainable economic and real estate sector growth.”
Navdeep Sardana, Founder & Chairman, Whiteland Corporation: ”We welcome the RBI announcement to keep the repo rate unchanged. With inflationary pressures well regulated by the RBI in the last quarter, this announcement further ensures that the central bank is committed towards maintaining an expansionary policy that is primed for national growth. As the fastest growing major economy of the world, India is on track of reaching it’s GDP growth targets of 7% for FY24. This announcement will also have a significant cascading effect of the Indian real estate industry. Stable home loan rates provide the conducive environment for stimulating real estate demand. The demand for luxury housing across major real estate hubs like Gurgaon are likely to see a significant surge in H2 of 2024 as homebuyers look to capitalize on the stable interest rates and high property price appreciation rates in these cities to realize their dream homes this year.”
Mohit Jain, Managing Director, Krisumi Corporation: “While a rate cut would have been an ideal scenario to propel economic growth across industries including real estate, maintaining status quo will help prevent borrowing cost from rising, enable affordability, propel the residential demand and boost the overall economy. The RBI’s endevour to maintain a stable policy environment will benefit not just homebuyers but also real estate developers who have the opportunity to innovate and cash in on the buoyancy.”
Aman Sarin, Director & Chief Executive Officer, Anant Raj Limited: “We believe that stable interest rates are particularly beneficial for the real estate sector. When interest rates remain steady, home buyers can plan their purchases without the uncertainty of potential rate hikes. The cost of borrowings too remain stable, thus, stable cost of construction. In the forthcoming RBI Monetary Policy, we hope the positive trend continues and expect favorable news for homebuyers specially in the affordable and middle class housing.”
S K Narvar, Group Chairman, Trident Realty: “This stability is crucial in our current economic environment which has a relatively constant inflation and high GDP growth rate for investment in real estate. It reflects confidence in our market, encourages both buyers and developers to engage in long-term investment that results in stability of the market. Since financing costs tend to remain stable, we are optimistic about the opportunities that lie ahead. This consistency not only creates a positive environment for homeownership but also strengthens our mission to provide sustainable properties that adapt to the changing needs of societies.”
Sanjeev Kumar Sharma, CFO, M3M India: “The RBI decision to keep the repo rate unchanged at 6.5% is a welcome move for the real estate sector. This stability in borrowing costs will encourage more homebuyers and investors to enter the market, supporting ongoing and future projects. Additionally, the robust GDP growth projection aligns well with our expansion plans, allowing us to meet the rising demand for both residential and commercial spaces. We are encouraged by the government’s dedication to fostering a conducive economic environment, which is essential for the long-term prosperity of the real estate industry. We are confident that this commitment will have a profoundly positive effect on our sector, promoting sustained growth and opportunities in the sector.”
Santosh Agarwal, CFO and Executive Director of Alphacorp: “With the RBI focusing on maintaining a balance between growth and inflation, this decision supports the ongoing recovery in the housing market. The consistency in policy rates ensures that borrowing costs remain manageable, encouraging investment in both residential and commercial projects. As we move forward, this stability is expected to foster greater confidence among stakeholders, driving sustained growth in the real estate sector.”
Aman Trehan, Executive Director, Trehan Iris: “The RBI decision to maintain the repo rate at 6.5% for the ninth consecutive time is a commendable move that balances inflation control with economic growth. We as real estate developers are encouraged by this move as it supports affordable homeownership and enhances market confidence. Moreover, the unchanged repo rate encourages more buyers to invest in their dream homes, particularly in the luxury sector. Additionally, this steady financial environment enables us to continue delivering exceptional living spaces and drive innovation in real estate, ultimately enriching community living and strengthening the housing market.”
Harinder Singh Hora, Founder Chairman, Reach Group: “We commend the RBI’s decision to maintain the repo rate. This strategic move is anticipated to positively impact commercial real estate growth by ensuring stable loan interest rates. Potential buyers in these markets will benefit from not having additional financial pressures, fostering a more conducive environment for investment. This decision is poised to elevate the sector, paving the way for new project launches in emerging areas.”
Rajjath Goel, Managing Director, MRG Group: “The authorities have reinforced the sign of stability by keeping the repo rate constant for the ninth time. With the GDP growth projection steady at 7.2%, this stability of 6.5% in the repo rate will strengthen the buyers’ incline towards the sector. Such steadiness will lower borrowing costs, making real estate development projects more accessible and affordable. However, a modest reduction in the repo rate would be beneficial, offering encouragement to developers and buyers. Given real estate’s sensitivity to price fluctuations, the RBI’s steady approach is expected to provide a valuable boost to the industry.”
Amit Modi, Director, County Group: “The move by RBI to keep the repo rate unchanged was the need of the hour and we hope it remains the same in near future as well. Looking at the macro economic situation of the country in regards to the middle class, this move was of vital importance for first time home buyers planning to invest in real estate as an asset class, since it’s brings in certain amount of stability in interest rates for those home buyers who are still sitting on the fence, but at the same time aspiring ownership of there dream home. Seen along with the recently announced choice under new indexation policy for Long Term Capital Gains Tax for assets bought before June 23, 2024, this will definitely be seen as favorable act by the huge middle class across India.”
Mohit Mittal, CEO of MORES: “This steady stance provides much-needed confidence to the real estate sector, particularly for homebuyers and developers who are keen on making long-term investments. With borrowing costs remaining stable, we can expect sustained momentum in the housing market, as affordable financing options continue to be available. This is especially significant for first-time homebuyers and the affordable housing segment, where interest rates play a critical role in decision-making. The unchanged repo rate is likely to support the ongoing recovery in the commercial real estate segment, encouraging businesses to expand and invest in new spaces.”
Raj Yadav, Founder, Navraj Group: “This stability is crucial for the real estate sector, particularly in the luxury residential and commercial segments, as it fosters an environment of predictability and confidence among investors and homebuyers alike. The unchanged rate helps keep borrowing costs steady, which is beneficial for both developers and end-users. For developers, it means continued access to affordable capital, essential for the timely completion of ongoing projects and the initiation of new ventures. For buyers, especially in the luxury market, it offers sustained access to favourable home loan rates, encouraging investment in premium properties.”
Umesh Singla, Chief Financial Officer, Worldwide Realty: “For the real estate sector, this steady stance provides a continued sense of predictability, which is crucial for both developers and homebuyers. At Worldwide Realty, we see this as an opportunity to sustain the momentum in the housing market. The unchanged rate is likely to keep borrowing costs stable, thereby fostering affordability for homebuyers and facilitating sustained demand. Additionally, the RBI’s focus on taming inflation while nurturing growth reassures us of a balanced economic approach. We believe this monetary policy stance will contribute to a conducive environment for long-term investments and robust growth in the real estate sector.”
LC Mittal, Director, Motia Group: “With home loan rates steady, the affordability index remains positive for first-time homebuyers. The share of the average home loan payment to income has improved from a high of 61% in FY14 to 43% in FY23, largely due to interest rate stability and rising incomes. This obviously would continue with the present rate stability. While the government’s affordable housing push and a supportive stance by the RBI would have given a fillip surely to this segment, it is quite probably because of price hikes that volumes have not grown so much. Affordable housing—units priced below Rs 40 lakh—accounted for 30% of new launches in the top seven cities in 2023. A status-quo repo rate, along with various government incentives like PMAY, will infuse continuous growth into the affordable housing sector and drive expansion in the overall real estate sector in step with the RBI’s projected 7.2% GDP growth for FY25.”
Anurag Goel, Director at Goel Ganga Developments: “With the RBI retaining its GDP growth estimate at 7.2% for FY25, we can look forward to sustained demand for office spaces, especially in IT hubs and emerging business districts. Office space leasing in the top 8 cities increased by 15% YoY in 2023 to 38.2 mn sq ft. A stable rate environment is likely to trigger more long-term leases and property acquisitions by businesses. What is more, catalysed by the pandemic, for e-commerce the boom goes uninterrupted; hence, demand continues to surge for warehousing and logistics spaces, having grown by 47 percent YoY in 2023 to 51.1 mn sq ft. This trend will be accelerated further as both financing costs and attitude of optimism toward the economy continue unabated.”
Aman Gupta, Director of RPS Group: “The RBI has retained the repo rate at 6.5 percent for the ninth consecutive time, which impinges in a huge way on real estate developers and investors. On the upside, stability in interest rates, along with the RBI’s now forecasted 4.5 percent inflation, gives an ideal platform for the planning and execution of long-term projects. It now enables developers to plan new projects confidently as financing costs are more predictable. Supply of new housing in Top 7 cities surged by 23 percent year-on-year in 2023, touching 3.65 lakh units. Subsequent supply would maintain this upward trajectory with stable interest rates and positive economic projections. In times of continuity concerning repo rates revised and sustained at the level taken, an unchanged status of interest rate will retain the lucrativeness of rental yield, already averaging 3-4 percent in major Indian cities on residential properties, and 7-9 percent with regard to commercial properties. With an RBI GDP growth projection of 7.2 percent for FY25, we may further witness sustained appreciation in property values—especially in fast-growth urban centers and their emerging satellite towns.”
Gurmit Singh Arora, National President, Indian Plumbing Association: “The RBI decision has a cascading effect on the whole realty ecosystem and allied industries, as it kept the repo rate unchanged at 6.5% for the ninth time in a row. Construction contributes to about 6-8% of India’s GDP. This stability gives predictability to funding costs for projects. On track to reach $1.4 trillion by 2025 in India, stable interest rates take an important seat in this race to growth for the construction sector. Also, the home improvement and interior design sectors get positively impacted with an unchanged repo rate. Stable EMIs will prompt more people to invest in renovations and upgrades. Furniture and home decor market in India was valued at $32 billion in 2023 and is further likely to bloom under such stable economic conditions. In all, the proptech sector saw over $3.4 billion investments from 2009 through 2022 alone. More innovation in property technology and digital real estate services shall follow under the proptech umbrella due to predictable real estate market conditions.”
Saransh Trehan, Managing Director, Trehan Group: “The RBI decision to maintain the repo rate aligns with its goals of curbing retail inflation and achieving a 7.2% GDP growth rate for FY25. We commend the RBI’s balanced approach and hope it yields positive results. In the real estate sector, demand has surged in recent years, with luxury markets experiencing a significant upswing despite consistent repo rates. While high-end buyers continue to invest in real estate, mid-range and affordable homebuyers may pause their purchasing decisions due to high mortgage rates resulting from the unchanged repo rates.”
Dushyant Singh, Director, Orion One 32: “The housing market is expected to experience broad-based growth across all segments. Although a reduction in repo rates would have been welcome, we understand the RBI’s decision to maintain rates to address retail inflation. By keeping interest rates stable, the central bank aims to promote stability, encourage competitive home loan offerings, and revitalize the housing market. This move is expected to boost the real estate sector, benefiting both developers and homebuyers. While the decision aims to stimulate demand, it also acknowledges the need for cautious progress amid inflationary pressures. This measured approach to borrowing rates prioritizes affordability and sustainability, supporting potential homebuyers and maintaining momentum in the market.”