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Hopes belied, but real estate sector is not too disappointed


rbi6--621x414By keeping the interest rates unchanged, the RBI has not only ignored the Government but also belied the hopes of a large section of real estate developers which was expecting some relief. However, there are also those in the industry to whom the decision didn’t come as a surprise given the various economic indicators in the country.

“A no-rate change this time was pretty much on the cards owing to retail inflation that stood at an eight-month high of 5.4 percent in June, CPI going up a bit due to food prices and irregular monsoon season affecting the country”, said Deepak Kapoor, President, Credai- Western U.P. & Director, Gulshan Homz. He said, “This is rather a careful decision by the RBI which has already done a triple rate cut this year. Thus, taking the current economic situation into consideration the decision looks just.” However, he asserted that in the final quarter of this calendar year, RBI might do another rate cut to improve the sentiments.

Rajesh Goyal, Vice-President Credai- Western U.P. & MD, RG Group, stated, “Looking at the current sentiments of the market which have been keeping a bit low recently, we were pretty hopeful that RBI might keep the rate cut cycle moving. The tight macroeconomic situation of the country could be attributed as the reason for the apex body to maintain the repo rate.”

According to Ashok Gupta, CMD, Ajnara India Ltd, “The way this sector is behaving at present, we were expecting the RBI to give us a much-needed relief in the form of another rate cut. If not the repo rate, then atleast a cut in CRR would have increased a bank’s lending capacity, the benefit of which would have ultimately passed onto the consumers and enhanced liquidity in the market.”

Manoj Gaur, MD, Gaursons India Ltd., said, “We expected that the RBI would cut rate by at least even 25 basis points which would have been good for the real estate sector. We are still hopeful that RBI will come up with some policy change in coming months so that people should get their dream home.’

PrashantTiwari, Chairman, Prateek Group, sees the RBI decision as a setback for the real estate sector. “The repo rate cut would have reduced the cost of funds to homebuyers as well as developers as it would have allowed the banks to lower the interest rates. We now hope that Government and RBI will come up with some solutions that will help the people buy homes.”


Saying it is not good news for the sector, Sanjay Rastogi, Director, Saviour Builders, said, “We are still hopeful and believe that RBI will understand the pain of people who are not being able to buy homes. We expect that RBI will also work towards ‘Housing for All’mission of the Government and come up with rate cuts that will be in line with the Government’s oft-quoted policy.”

However, OwaisUsmani, MD, Presidency Infraheights, said, “It is a positive move as it indicates that interest rates will not go upward. We hope the era of interest rate hikes has ended. In line with market expectation, RBI has kept repo rates untouched thus allowing buyers to execute their plan of investing in property. Now they are sure that since rates will be constant, the EMIs will not increase either”.

Anil Kumar Tulsiani, CMD, Tulsiani Developers and Construction Ltd, said, “We expected a cut because the sector is going through a low phase, sales volumes are low. By reducing the interest the RBI could have given a required boost to the sector.”

According to Navin Raheja, Chairman of Naredco, “There was modest probability for further rate cut by the RBI as clear picture will be determined after the monsoon season. Meanwhile, witnessing the healthier rain till now have given ray of hope that the wait won’t stretch too long before the central bank brings down rates as macro-economic indicators have been improving and inflation is coming down.”

Samir Jasuja, CEO and Founder, PropEquity, said, “We hope RBI announces rate cut of at least 25 BPS in its next policy meeting to help the falling housing demand in the country and this would somewhat help the sector in clearing its unsold inventory”.


Praveen Tyagi, CMD, VVIP stated that “Real estate sector in particular banks heavily on the final festive season of the calendar year, as most customers in India usually wait for this time of the year to come and invest in gold, automobile, shares and largely, property. Therefore, if the RBI also does a rate cut in its next review then the demand for property market will see a steep rise as home loans will be already cheaper and better deals will be made available to the customers”.

Rajnikant Sharma, CMD of RJ Group, said, “The RBI has already started the rate cut cycle as it had promised in the beginning of the year. Although, we were anticipating a rate cut this time as well as sentiments were keeping a bit low and this would have helped the cause.”

In Credai RNE General Secretary Gaurav Gupta’s view, “Reduction in repo rates would have been a welcome step as currently economy needs a booster to come out of sluggishness.”

In the backdrop of a majority sentiment in the real estate sector, Sachin Sandhir, Global MD, Emerging Business, RICS, said, “A rate cut at this point in time would have further encouraged market sentiment and helped in growth of the sector. As many borrowers, especially home loan customers, were upset that banks which consistently raised rates in the tightening cycle are not showing the same zeal in lowering interest rates. Lenders, especially state owned banks, are cautious when it comes to lending as most of them are trying to recover bad loans while coping with a slump in profits.”

Arjunpreet Singh Sahni, Executive Director, Solitairian Group said , “As was expected, RBI has not reduced the Repo Rate any further due to its concerns about the inflationary outcomes and unfavorable economic scenario, however, a reduction in policy rates at this juncture would have been highly favourable for real estate industry which is reeling under low-demand pressure since long. It is more worrisome that despite three successive reductions in Repo Rate this year, no significant cut in home loan interest rates has taken place and so the middle class which forms a major chunk of home buyers in the country still remain discouraged from participating in real estate market.”


Aman Nagar, Director-Paras Buildtech said, “With the decision of RBI Governor to keep the repo rate unchanged, it has now become amply clear that our wait for some kind of relief has stretched even further. The real estate sector had lots of expectations, but now we have to wait and watch for the next policy review, however, we welcome the pronouncement for a better prospect as it seems that it want to create a conducive environment for the economic growth and anticipate for a positive outcome.”

Anuj Goel Executive Director KDP Infrastructure said, “Though we were expecting that the RBI will reduce repo rate further in continuation with the last three successive reductions, it took a long-term approach and shifted the spotlight on overall economic growth by keeping the repo rate unchanged. We understand that due to spike in consumer inflation, RBI is looking for favourable economic conditions when more reduction in policy rates will be possible. Now we expect by the next policy review it will have plenty of room for further reductions translating into reduced interest rates for home loan borrowers.”