The RBI decision on Tuesday to cut repo rate by an unexpected 50 bps has been profusely welcomed by the developer community. In their reactions sent to Realty & More, prominent players of the industry have lauded Governor Raghuram Rajan’s decision and expressed hope that it will result in giving the much-needed push to the industry.
Getamber Anand, President of real estate developers’ umbrella body Credai, has said, “Not only real estate but the manufacturing industry and all businesses in general are more than encouraged by this announcement.” Anand said, “Besides this reduction, 1 per cent SLR during the year @0.25 per cent per quarter is a welcome move.” This, he said, “is actually in coordination with the Prime Minister’s vision of making India an aggressive manufacturing destination.
Navin Raheja Chairman, Naredco, said, “The decision of RBI to cut the interest rates was overdue in the environment of lower inflation and poor domestic demand.” The homebuyers, he said, were upbeat but in a wait-and-watch mode due to high prevailing interest rates. “We are hopeful that with this announcement of rate cut, the banks will take the cue and pass on the benefits to the end-users which will trigger the demand and offtake of housing ahead of the festive season,” Raheja said.
Brotin Banerjee, CEO and MD, Tata Housing Development Company, said, “With festive season around the corner, this was the perfect time for the RBI Governor to announce the rate cut of this magnitude.” In Banerjee’s view, the cumulative cut of 125 basis points since January this year “will give a very good push in improving both the consumer sentiment and the real estate.”He said that cheaper, low-value housing loans will also help in augmenting the affordable housing segment. However, he added, “It is important that the banks translate the rate cuts into lower lending rates so that consumers can leverage the true benefits of the announcement.”
Expressing similar sentiments, Vineet Relia, Managing Director of SARE Homes, said, “The RBI rate cut of 50 basis points is a favourable move that would positively impact the buyer and developer sentiment. Real estate is a rate-sensitive sector and the lowering of the repo rate is likely to open up the market for easier housing finance options. We are hopeful financial institutions would follow suit and pass on the benefits immediately to the customer.”
Anuj Puri, Chairman & Country Head, JLL India, told R&M, “As opposed to the market’s expectation of a 25 basis points cut, the RBI has delivered an astounding 50 basis points reduction.” With this, he said, “It has clearly abandoned its cautious baby-steps approach and assumed a bolder stance, obviously because the current economic fundamentals provide it with the room to do so.” Puri also said, “I do not think any further rate cuts are likely in this financial year, especially since the RBI foresees a moderate growth in inflation rate in the interim months.”
Vijay Gupta, CMD, Orris Infrastructures said, “This is the much needed relief provided by the RBI at the onset of festive season and now we look forward to the banks lowering their interest rates. The 50 basis point cut in repo rate will definitely help strengthen the market sentiments and boost the housing demand. If everything goes as expected we are looking forward to huge demand coming from the homebuyers on the back of reduced home loan rates.”
According to Anuj Goel, ED, KDP Infrastructures, “The RBI has provided bigger than expected relief to the sector by reducing the repo rate by 50 basis points. It’s a highly positive move at this time when housing market is marred by low-demand sentiments, despite the festive season round the corner. We expect now the residential real estate sector will bounce back on high growth trajectory, provided the banks pass on the benefits to the customers immediately.”
Amit Modi, Wholetime Director ABA Corp and Vice President CREDAI Western UP said, “This is a surprisingly 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, 50 basis points cut may not be enough to spur the investment cycle, there is definitely more required, and lending rates will have to further come down by at least one percentage point to improve the general sentiment towards investments in the country. We sincerely hope that both Finance Ministry as well as the RBI asks all the Banks to transfer the benefits to the end consumer, else this move will severely stop short of benefiting the consumer and only help in buffering the bottom lines of the bank.”
Aman Nagar, Director-Paras Buildtech said, “The assessment to cut repo rate in current scenario is really a very welcoming move at this crucial moment, when the real estate market is largely impacted by slow market movement, due to low demand. We hail RBI Governor’s highly positive move taken at the onset of festive season will definitely help the overall market to gain momentum. The festive mood always induces property purchase, as religious sentiments remain high during this period which is considered to be a very auspicious time for property purchase. So now we can expect robust demand for houses and easy financing for real estate sector.”
Brijesh Bhanote, Director Sales and Marketing- Lotus Greens Developers Pvt Ltd said “The current deceleration by RBI of reducing repo rate by 50 basis point to 6.5 points while keeping the CRR and SLR unchanged, has come as big announcement for both aspiring home buyers & developers. Following this move hopefully most of the banks will be softening their home loan rates elevating festive mood of home buyers. It is very difficult to extrapolate the future sentiments; however this move is bound to shift prevailing market conditions towards moderate growth trajectory while encouraging the prospective home buyers to execute their buying plans. We don’t expect any further rate cuts in the running financial year, but as a developer we believe that the amendment in borrowing rates for developers could be considered by central bank in the interim months to create a win-win situation for overall sector.”
Deepak Kapoor, President, credai Western U.P said, “Since home loans are linked to base rates, the reduction in repo rate will benefit borrowers and reduce the EMI’s for home-buyers. We were expecting the rate cut to be reduced by 25 bps but to our amaze it was slashed down to 50 Bps. This is a great move by RBI and we are happy that home buyers will reap rich benefits out of it. The rate cut has come on the right time when everyone is gearing up for festive season. This is the perfect time when potential customers plan to invest in property.”
According to Manoj Gaur MD Gaursons India “There were huge expectations by the sector form RBI this time and finally it has been fulfilled. We were looking ahead for rate cut which could boost the real estate sector in a big way. With festive season around the corner, the timing of the RBI to reduce the rate could not have been better. The banks should now quickly reciprocate and reduce the interest rates on loans so that the borrowers can also yield the gains. Once the lending rates will be reduced by banks, we believe that the home buyers will feel encouraged to come and invest in properties. The fall in interest rates will further assist in enhancing the growth of realty market”.
According to Prashant Tiwari, Chairman, Prateek Group “Reduction in the repo rate by RBI was an awaited move. The results of this rate cut will be reaped by home-buyers in the form of reduced home-loan interest rates. The realty sector will get a much needed boost that it was looking for and overall market outlook will also improve. The huge rate cut has come as a surprise and has infused positive vibes in the realty market. Once the rates are transmitted to borrowers, the market sentiments will certainly improve. Along with the reduction in repo rate, RBI could have also considered the cut in CRR as it would have improved the liquidity with banks which would have allowed banks to increase the supply of loan-able money leading to improved sentiment in the Real Estate sector”.
Om Chaudhry, CEO & Founder, FIRE Capital and Chairman, Astrum Homes said “Reduction in Repo Rate by 50 basis points is a much awaited and needed step to improve the market sentiments and real estate sector. The reduction is very timely as the festive season is approaching and during this period buyers always look for some discount or relaxation in interest rates from bank. However, the reduction in CRR would have been much appreciated by the sector as it would have given a free hand to the banks to increase the supply of the loan-able money”.
According to Sanjay Rastogi, Director Saviour Builders said, “Led by our expectations, reduction in interest rates is a welcome move by RBI. The revision in rates is very much favorable for real estate sector and will boost the demand for properties. Real estate, being a rate sensitive sector on large extent, will gain from the reduction in repo rates. The rate cut holds a great significance as the banks will now incise their interest rates on loans and the benefit will be passed to borrowers at last.”
According to Anil Kumar Tulsiani CMD, Tulsiani Construction & Developers said, “The drop in rate cut will improve the market sentiments and will give the required thrust to real estate market. The reduction in EMI’s as a result of rate cut will bring huge respite to home buyers. With the fall in interest rates, the demand for home loans will continue to grow stronger. This unexpected rate cut of 50 bps has made the festive season more blissful for us and our customers as well. We are expecting to see increase in property demand and revival in real estate sector with such a positive move by RBI. “