Real Estate Reacts on RBI REPO cut rate

The Reserve Bank of India (RIB) has cut the REPO rate by 25 basis points to 6% in the first b-monthly monetary policy meet of the new financial year. It was the first back to back rate cut by the Central Bank since the Monetary Policy Committee was formed in 2016. The real estate industry has positi

BY Realty Plus
Published - Apr 9, 2019 7:42 AM

The Reserve Bank of India (RIB) has cut the REPO rate by 25 basis points to 6% in the first b-monthly monetary policy meet of the new financial year. It was the first back to back rate cut by the Central Bank since the Monetary Policy Committee was formed in 2016. The real estate industry has positively accepted the Reserve Bank of India's (RBI) decision to keep the repo rate unchanged at 6.5% on December 5. Real estate and allied industry professionals believe that this decision will not hurt home buyers' sentiments further in the current situation. Developers share their reactions on RBI's latest move. Manoj Gaur, MD, Gaurs Group “The benchmark lending rate cut by 25 bps to 6 percent is a positive move for real estate sector. This move will surely benefit banks which eventually can ease Lending in the sector. The second consecutive reduction shows positive signs which can surely enhance the demand for housing, marginally.Though the last cut wasn’t passed on to the consumers so we would have to wait and watch whether this time the consumers get the benefits or not”  Prakash Pandey, Director, Fairwealth Group As Expected, RBI cuts rates by 25bps, and keeping the stance neutral. Looking at the rising crude oil prices, upcoming general elections and global 'trade tension' this 25 bps rate cut is a prudent to step towards pushing overall economic growth.  This will definitely help NBFCs and small finance banks like Equitas, Ujjivan Financial Services and L&T Finance. we are hoping another 25 bps rate cut in June policy. This welcome move will help the Auto sector and Real Estate sector up to certain extent. Amit Modi, Director- ABA Corp, President (Elect) CREDAI (Western UP) “This is a good and much awaited development, since easing interest rate will help revive the investment cycle, especially in sectors like Real-Estate which are highly sensitive to interest rate movements. RBI’s decision of reducing its key policy rate by 25 basis points for the, second time in a row shows a softer stand towards lending. It’s good news especially for home loan borrowers with the RBI bringing down the key policy rate by 25 bps in its first bi-monthly monetary policy review of the financial year 2019-20, signalling lower interest rates. Hence we also hope that with this development, the banks will immediately pass on the cut to the home buyers, since that’s the confidence booster for the real buyer, and will finally lead to much needed investment spur in the sector, which will not only culminate in more launches in real estate sector, but more importantly timely project completions as well”. Pradeep Aggarwal, Founder & Chairman – Signature Global India Pvt. Ltd and Chairman - ASSOCHAM National Council on Real Estate, Housing and Urban Development The RBI policy cut rates will not only be a positive outcome for the Real Estate sector, but also for the eligible new home borrowers who can take advantage of the subsidies scheme under PMAY (Pradhan Mantri Awas Yojana). This move will be a big boost for affordable housing and help for first time home buyers also the rate cut brings fetches confidence for the market as this will make availability of more money at the banks thereby lowering the EMI burdens. And to add icing to the cake, the government has also extended the time-limit of the PMAY scheme to March 31, 2020 for middle-income group buyers. Deepak Kapoor, Director, Gulshan Homz & Former, President, CREDAI Western UP “With RBI reducing the repo rate back to back this financial year, shows a softer stand towards lending. I am sure Bank’s would surely reduce the lending rates, though marginally, which can boost the sentiments in the market. Also with the push which the government showed towards affordable segment in the budget 2019 where the income tax rebate was extended to Rs 5 lak, I am sure end users would now be more motivated, to purchase their homes, post the repo rate cut.” Ashok Gupta, CMD, Ajnara India Limited The 25 basis point policy rate cut is anticipated to rejuvenate the real estate market as this step will give assistance in lowering the marginal cost of fund based lending rates (MCLR) thereby bringing in more availability of money at the banks. The RBI Policy rate cut will not only benefit the developers, but also will favour the homebuyers by lowering the EMI burden. Vikas Bhasin, CMD, Saya Group This is surprisingly a good development -- two back to back repo rate cuts this year -- and indeed a step in the right direction. It will help to ease the pressure off the market by attracting more number of buyers to invest in the real estate sector. It will accentuate the recent softness in momentum in the domestic economy. Dhiraj Jain, Director, Mahagun Group This is really good news especially for home loan borrowers with the RBI bringing down the key policy rate by 25 bps in its monetary policy review, signalling lower interest rates. With lower repo rates banks would be able to set the direction and reduce the level of interest rates, which eventually witness the increase of demand for homes in real estate sector. The year has been good so far with lot of policy measures being taken by the authorities that will help the sector improve its standing. Kamal Taneja, MD, TDI Infracorp The real estate segment is expected to pick up with RBI monetary policy's rate cut. The repo rate cut of 25 bases points will not only benefit the developers but will also favour the homebuyers. More money available in banks at a lower cost will result in increased purchasing power as there will be a lower EMI burden on the buyers. It will also lighten the liquidity crunch and lower the cost of finance for the developers. Such positive announcement by the RBI was much needed for the realty sector to take off. Harinder Singh Hora Chairman, Reach Group  “The consecutive deduction is a positive move with general elections also just round the corner. The realty sector will surely see some positive sentiments with this cut. We can also expect another marginal cut in the June Review.” Amit Raheja, CMD, Wealth Clinic “A stance neutral policy by RBI is anticipated to revive the real estate sector to a great extent and also cue the banks for hiking or cutting lending rates. Not only developers, but even the end-users can also take advantage from the policy as the rate cut will minimize the marginal cost of fund based lending rates (MCLR) and make more money available in the banks thereby lowering the burden of EMI.” Prateek Mittal, Executive Director, Sushma Group “The second consecutive rate cut of 25 basis points by RBI in its monetary policy would provide relief to the borrowers and will provide a boost to the real estate segment. This move will certainly bring greater liquidity for the economy and is anticipated to revive the real estate sector to a great extent. The reduction in repo rate will help the borrowers of big-ticket loans like home loans which will certainly lead to the increased demand for homes”. Kaushal Jain, MD, Arihant Group “The repo rate cut by RBI will aspire the real estate sector to pick up their businesses in the market. It will be a constructive progression for the sector and is counted on with the RBI policy rate cut by 25 bps. This step is highly expected to rejuvenate the real estate market as it will give assistance in taking down the marginal cost of fund based lending rates (MCLR) thereby bringing in more availability of money at the banks.” Kushagr Ansal, Director Ansal Housing & President CFREDAI Haryana A constructive progression for the real estate sector is counted on with the RBI policy rate cut by 25 basis points. This is surely going to boost the market as this is the second time in FY 2018-19 that the rates have been cut by 25 bps changing the reserve repo rate at 5.75%. The marginal cost of fund based lending rates is expected to be low which in turn infers the availability of more money the banks thereby benefiting both the end-users and the developers. Rajesh Goyal, MD RG Group and VP CREDAI NCR This is a good development, since easing interest rate will help revive health of businesses like Real-Estate which are highly sensitive to interest rate movements, but while it is indeed a step in the right direction, there is definitely more required to improve the sentiment towards investments in the country. The back to back repo rate cuts will boost the affordable and mid segment housing sales. Dhiraj Bora, General Manager, Corporate Communication, Paramount Group Now the repo rates are brought down by 25 basis points to 5.75 per cent from 6 per cent, we are assuming the banks would pass on the rate cut in a similar direction. From the point of view of the real estate sector, the lowered interest rates on home loan EMI is likely to give another sign of relief after Interim budget.  Om Ahuja, Chief Operating Officer- Residential Business, K Raheja Corp The central bank has shown a positive stance by announcing a reduction in key lending rates. This decision will augur well for the country's GDP growth and key industries particularly residential real estate. Homebuyers now stand to benefit by having a higher purchasing power enabling them to buy premium homes of their choice. Overall, this decision will bring cheer to the housing industry and enhance the investors' sentiment. Sagar Saxena, Project Head, Spectrum Metro The 25 basis point policy rate cut is anticipated to rejuvenate the real estate market as this step will give assistance in lowering the marginal cost of fund based lending rates (MCLR) thereby bringing in more availability of money at the banks. The RBI Policy rate cut will not only benefit the developers, but also will favour the homebuyers by lowering the EMI burden. Tushad Dubash, Director, Duville Estates “The earlier rate cut broke the deadlock, this one should provide further momentum given the timing of Gudi Padwa being around the corner. We hope that this will spur home buyers in taking a decision. There seems to be a definite buoyancy in the market given the regulatory changes of lower GST and higher velocity in terms of offtake over the last quarter which we hope will carry onwards into the first quarter of this financial year. Further the rate cut is also expected to help boost money supply into the market which will help create a positive environment for the industry”. Samyak Jain, Director, Siddha Group ''The rate cuts that have come in the first two announcements of the calendar year augur well for the Nation’s GDP and will lead to an overall jump in consumer sentiment, with a specific focus on the real estate industry. The onus of ensuring that this happens lies with the banks who need to pass on this benefit to investors and home buyers by lowering the home loan interest rates. The heartening part to this is that this development has set the realty market on a road to recovery. We welcome this positive move and applaud the central bank on setting the economy on a positive path.'' Harvinder Singh Sikka, MD, Sikka Group  Developers are working hard to bring real estate back on track and Government is also supporting us in every possible way. We believe that the decision to reduce a repo rate by 25 basis point will prove beneficial from a consumption and lending perspective, thereby boosting economic growth. This was a surprise announcement for both developers and buyers. Manish Lunia - Co-Founder at FlexiLoans have shared his views on the RBI Monetary Policy announcements today, 

The rate cuts by the Central bank will act as a balm to the subdued economic activity components that have a lot of political and macro economic uncertainties to handle in the near to medium term. NBFCs and Fintech lenders who have faced starc rise in cost of funds in the last 9 months will also get some breather with this action and is a welcoming move.

Khushru Jijina, MD, Piramal Capital and Housing Finance It is necessary to resurrect India’s consumer demand and economic growth before a synchronous downturn in advanced economies heighten market volatility. Today’s rate cut and moderation in liquidity coverage ratio coupled with recent instances of liquidity injections indicate that RBI is cognizant of these risks. These measures would certainly help ease liquidity and improve access to cheaper credit by India Inc as well as retail consumers. The focus to align the Indian housing finance securitisation market as well as the secondary market for corporate loans with international best practices as announced today will essentially deepen these markets and ensure better price discovery. We look forward to the detailed notes on RBI’s decision to allow Non Deposit taking NBFCs to apply for Authorised Dealer licenses which is expected to expand the forex market. Niranjan Hiranandani - National President - NAREDCO and Sr VP-Assocham The need for flexibility with the evolving situation in India, given that both, inflation and growth have slowed, was reflected in the RBI’s move. Economic growth weakened to 6.6 per cent at end-2018, the slowest in five quarters; while annual retail inflation was low, at 2.57 per cent in February following five months of deflation in food prices. The RBI move is expected to lift industry sentiments, as also provide relief to various stakeholders like corporates as also in real estate, homebuyers. We expect that banks further pass down the benefit for the rate cut to the home buyers which shall further trigger the home buying in to the actual sales. Shishir Baijal, Chairman & Managing Director, Knight Frank India We are delighted with the second consecutive rate cut announced today which ushers an era of falling interest rate regime. We hope that the reduction in rate are passed on by the banks to the home buyers. Lower interest rates, along with the recent reduction in GST rates for under construction properties, should provide the fillip to end user demand. The real estate sector has been looking forward to such stimuli to boost sales velocity.

Mr. Amit B. Wadhwani, Co-founder, Sai Estate Consultants 

The second consecutive repo rate cut from the RBI is in lines with the expectations, although markets were expecting a more accommodative stance with 50 bps rate cut.There have been many meaningful interventions by the government and regulator which has provided positive boost to the buying sentiment amongst the home buyers. The real estate residential sector better sentiment growth concurs with improved sentiment in overall business sentiment in the country. Besides OMO, the added focus on currency swap will provide the required easing in the transmitting benefits of the rate cut and also emanating into improving liquidity in the sector. With short term food inflation expected to be benign, the possible seasonal related inflation reversal after monsoon will be a guidance of MPC to go for next rate cut in the month of August.

Mr. Rakesh Reddy, Director, Aparna Constructions & Estates Pvt. Ltd

Revision of repo rate by 25bps by RBI for the second time this year is a much needed and encouraging move for the real estate sector. Such consistent initiatives not only help ease liquidity crunch, it also aids in improving access to affordable credits thereby reviving consumer demand and overall health of the sector. Recent reduction in GST for under construction properties clubbed with easing the interest rate will surely provide the much needed stimulus to the end user demand. We are hopeful that these benefits will be passed on to the homebuyers by the banks as affordable home loans have a direct influence on buying sentiments in an ancillary way.

Rohit Poddar, Joint Secretary , NAREDCO West and Managing Director, Poddar Housing and Development Ltd.

The actual inflation has stayed below than projected since February so there was a space for a further cut down in the rates. This is an election year and we can expect transient policies by the authorities due to the ambiguity over the possible policy changes by the newly elected government. This rate cut will affect the buying sentiments in a roundabout way as it is likely to make home loans cheaper. It will be a buoyant Gudipadwa for the sector.

Madhusudhan G, Chairman and MD, Sumadhura Group

“After lowering the GST rates, this second consecutive repo rate cut by RBI will further propel the Indian real estate industry into a recovery drive in the coming year. There is already a significant boost witnessed in the housing sales after the first repo rate reduction, and this move is another shot in the arm. However, the industry would be hopeful that RBI establish a mechanism for effective transfer of these rates leading to lower lending rates, which would accelerate consumer spending, further bolstering economic growth."

Shailesh Puranik, Chairman and Managing Director

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