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RBI makes third rate cut; industry welcomes move

As predicted by most analysts, the Reserve Bank of India cut interest rates for a third time this year on Tuesday eliciting positive response from the real estate industry.

The RBI’s quarter point reduction in the repo rate to 7.25 per cent showed policymakers recognised the need to put the economy on a sounder footing.

“With low domestic capacity utilisation, still mixed indicators of recovery, and subdued investment and credit growth, there is a case for a cut in the policy rate today,” the RBI said in a statement.

Still, the RBI did not take any new steps to free up cash-strapped commercial banks’ liquidity, which bankers had said were needed for them to lower lending rates further and pass on the benefits of monetary easing to the broader economy. Instead, the central bank urged lenders to lower their lending rates.

sachin_sanjayWelcoming the decision, Sachin Sandhir, Global Managing Director – Emerging Business, RICS, said the move was on expected lines. “The primary reason for the repo rate cut is the consistent easing of the inflationary pressure, as indicated by the recently published data. With the rate revision, it is likely that there will be a surge in corporate lending. This would benefit the real estate and construction sector firms too,” Sandhir said in his reaction.

David Walker-20090206David Walker, Managing Director of SARE Homes, said, “Whilst eye-catching growth numbers of 7.6 per cent have been published, our on-ground experience is that demand remains weak.” In his response sent to Realty & More, Walker said, “We urge the banks to pass on the RBI rate cuts so that consumers and business boost consumption. We also urge the Government to step up public infrastructure investment that can pump prime private investment and to recapitalise banks so that they have the balance sheets to support the economy.”

RK ARORA,CMD, SUPERTECHCalling the reduction “not sufficient”, RK Arora, Chairman of Supertech Limited, however, said, “It is an indication of positive approach of RBI towards investment in the country and the real estate Industry welcomes it.” Arora said, “The Industry was seeking a cut of 1 per cent interest rate to bring back confidence in homebuyers and investors to provide a comfortable EMI level and to kick-start demand.”

Dhirendra Gaba, Chairman and Managing Director (CMD), Fairwealth HousingDhirendra Gaba , MD, Fairwealth Housing, said, “This is the much needed relief which was required to boost the buying sentiments in the market so that the buyers could be encouraged to invest in their desired properties as now there could be the possibility for some reduction in the home loan rate of interest which is a good news for the end users and real home seekers.”

Brotin BanerjeeWelcoming the announcement, Brotin Banerjee, ‎MD & CEO at Tata Housing Development Company, said, “It is now important that the cumulative rate cut amounting to 0.75 per cent since January this year, gets translated into the lending rates being offered by the banks and financial institutions to the consumers.” Banerjee said, “The monetary policy has been a good initiative to tackle the problem of medium-term supply side constraints given the slow pace of economic revival in the country.”

Mr.Manoj-Gaur,MD,-Gaursons-India-Ltd.....Manoj Gaur, MD, Gaursons India Ltd said, “We welcome this step by RBI although we were hoping for the 50 basis points reduction. However, we are happy as this decision will bring a huge relief to the sector which was battling through tough times. Now with this move we expect the sales to improve as more potential customers will think of buying homes as the interest rates will be reduced. Now we have to wait and see that when will the banks and Home loan providers will reduce the interest rate”.

Prashant-Tiwari-CMD-Prateek-GroupPrashant Tiwari, CMD, Prateek Group said, “We welcome the repo rate cut and step taken by RBI, the real estate sector requires larger cut in the repo rate and hope the RBI continued the monitoring easing in the coming months. This repo rate by the RBI will further reduce the cost of funds to homebuyers as well as developers as it will allow the banks to lower the interest rates. This will ensure the heightened property demand in the coming times”.

Gaurav GuptaGaurav Gupta, General Secretary, CREDAI-RNE said, “The RBI’s decision to cut repo rate by 25 basis point to 7.25 per cent from 7.50 per cent is good news for real estate sector. This kind of repo rate cut is helpful for projects falling under affordable segment. Home loan interest affects middle class segment people as they are the ones depending on it. However, I would say that more interest rate cuts are needed if we want to see people realizing their dreams of buying homes for self use”.

Mr. Sanjay Rastogi, Director, Saviour Builder Pvt. Ltd. (3)Sanjay Rastogi, Director, Saviour Builders Pvt. Ltd. said, “The surprise cut in repo rate will definitely help the real estate sector gain some steam which is battling with a slowdown since quite some time. People have been waiting for the house prices to come or for the EMIs to rationalize, and this cut in repo rate will definitely mean a good drop in EMIs.”

Aman-AgarwalAman Agarwal, Director, KV Developers said, “It is a welcome step by the apex bank. We now expect banks to cut home loan rates to pass on the actual benefits to home buyers. This will revive the otherwise sluggish market and hope demand and supply gap is reduced. Developers also stand to gain as market will see more liquidity. Once rates are lowered by respective banks, we expect faster purchasing cycle and reducing inventories.”

RK Panpalia, MD, Wave Infratech said We at Wave, applaud the move taken by RBI to reduce the repo rate by 25 bps which is a good move for the customers.  This decision by the apex bank would bring in more liquidity in the market which in turn would mean a boost to the real estate sector as well. Moreover, the reduction in repo rate would trigger a fall in home loan rates and hence reduced EMIs and therefore a renewed interest by end users to invest in housing projects.

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Deepak KapoorDeepak Kapoor, President, CREDAI Western UP, said “We are happy and surprise by this move of RBI to reduce the repo rate as RBI has previously reduced the rate twice unexpectedly. This move will improve the market sentiments temporarily more such steps are required by the Government to uplift the real estate market.  A low interest rate is essential to fulfil the housing for all dream of the Government”.

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