Real Estate Developers reaction on RBI Policy

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NEW DELHI:In the Sixth Bi-monthly Monetary Policy Statement, 2018-19 Resolution of the Monetary Policy Committee (MPC) Reserve Bank of India, revised the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points from 6.5 per cent to 6.25 per cent with immediate effect.

Go through the reaction of real estate developers on the same:

Manoj Gaur, MD, Gaurs Group and Vice President, CREDAI National
“With RBI reducing the repo rate after keeping it unchanged since last two monetary policy reviews, it 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 5 lac, I am sure end users would now be more motivated, to purchase their homes, post the repo rate cut.”

Pradeep Aggarwal, Co-Founder & Chairman, Signature Global and Chairman, National Council on Affordable Housing, ASSOCHAM

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.

Amit Raheja, MD, Wealth Clinic

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.

Deepak Kapoor, Director, Gulshan Homz & Former, President, CREDAI Western UP

This is a surprisingly good development and indeed a step in the right direction. The repo rate that was left unchanged since October 2018 has now been cut by 25 bps, thus giving a sigh of relief to the real estate sector. It will help to ease the pressure off the market by attracting more number of buyers to invest in the real estate sector.

Gaurav Gupta, President, CREDAI Ghaziabad and Director, SG Estates

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 first time in FY 2018-19 that the rates have been cut by 25 bps changing the repo rate at 6.25 % and reserve repo rate at 6%. 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.

Nipun Gaba, Senior Vice President, Fairwealth Group

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, 25 basis points cut may not be enough to spur the investment cycle, there is definitely more required, to improve the sentiment towards investments in the country and will boost the mid segment housing sales.

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.

Prateek Mittal, Executive Director, Sushma Group

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.

LC Mittal, Director, Motia Group

After the Interim budget 2019, RBI monetary has come up with even greater relief to the real estate sector. The repo rate which was kept stagnant from October 2018, has now been reduced by 25 basis points which will ease the pressure off the market and accelerate the investment cycle. Post the implementation of GST & RERA this rate cut is going to help the realty sector flourish.

Kushagr Ansal, Director, Ansal Housing

Since last one & half year on every policy review we were expecting the cut in repo rate but finally, the government reduced repo rate by 25 basis point after the interim budget. Post implementation of GST & RERA real estate sector is on the revival path and decreased repo rate will be additional support for the buyers.

Ashok Gupta, CMD, Ajnara India

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 much awaited announcement for both developers and buyers.

Rajesh Goel, MD, RG Group

With the cut in Policy rates by 25 basis points, there are aspirations for the Real Estate Sector to pick up their businesses in the market. This step will surely assist in keeping the marginal cost of fund based lending rates (MCLR) low which means there will be more money available at the banks at a much lesser cost lowering the EMI burden. Though this is a positive progress for the market, but still it needs more to stimulate the investments in the country.

Dhiraj Bora, General Manager, Corporate Communication, Paramount Group

MPC has changed its stance to neutral and apex bank finally cut interest rates, in line with what the sector was expecting. Now the repo rates are brought down by 25 basis points to 6 per cent from 6.25 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.

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.

Vikas Bhasin, CMD, Saya Homes

We expect that the RBI will go for the much needed reduction in the key lending rate (repo) so that real estate sector could start the new financial year (2019-20) with a positive sentiment.

Realtors admitted that the RBI has provided a helping hand to the real estate sector by not hiking interest rate in the recent past, but demanded more was needed give a boost to prompt buyers.

Deepak Kapoor, Director, Gulshan Homz & Former President CREDAI Western UP

Any interest rate hike at this stage could neutralise the benefits announced by the Finance Minister Piyush Goyal in his interim Budget. Hike in interest rate would dissuade first time home buyers.

Goyal in his interim Budget on February 1 had proposed to extend tax sops for affordable home developers, besides removing the tax on notional rent for a second housing unit as well as unsold units.

The Budget also proposes to extend the benefits under Section 80-IBA of the Income Tax Act for one more year–to housing projects approved till March 2020, which will boost supply of affordable housing.

Nakul Mathur, MD, Avanta Business Centre

We hope the issue of Liquidity crunch to be addressed in the policy review. The strengthening of NBFC will ease out the funding thus increasing investments in the commercial segment.

Ashok Gupta, CMD, Ajnara India

The central bank will take more steps to strengthen the NBFCS, a major source of funds for the real estate sector.

Dhiraj Jain, Director, Mahagun Group

The Governor should also meet the representatives of our sector so that we can get opportunity to present our views and also the problems being faced by us.

Kamal Taneja, MD, TDI Infracorp

The inflation is ruling low. It is an ideal time for the RBI to go in for a rate cut. We demand at least 50 basis points rate cut at this juncture.

The Delhi-NCR, the biggest property market of the country, is facing a muti-year demand slowdown, resulting into piling up of huge unsold inventories.

Nipun Gaba, Vice President, Fairwealth Group

Basis the recent announcements in the Interim Budget 2019, we expect a rate cut in the lending rates. Where the announcements in the budget have all catered to the needs of individuals, any hike in the rates will barr the individuals from any benefits.

Dr. Niranjan Hiranandani, President, NAREDCO

The first Monetary Policy Committee (MPC) meeting under RBI Governor Shaktikanta Das, and an ideal ‘positive’ to mark the same – a rate cut by 25 bps; change in stance to ‘neutral’. The repo rate now will be 6.25 percent, while the reverse repo rate stands reduced to 6 percent.

This is the perfect follow-up to the Budget Speech by Finance Minister Piyush Goyal, and this will not just enhance liquidity in the economy but also boost investment and give the economy a positive growth phase. The option for further rate cuts in forthcoming reviews remains an option, and I hope we will see more such ‘positive moves’ from the RBI. From a real estate perspective, this will impact home loan interest rates, and reduced EMIs are among the best harbingers of positive sentiment, leading up to further off-take of real estate across India.

Khushru Jijina, MD, Piramal Capital and Housing Finance

“The 25 bps cut in policy rates is a welcome move and in line with industry expectations as well as with central banks in advanced economies. Resulting lower cost of funds would help the NBFC sector to recover faster and its positive effects would trickle down to the larger sections of the economy namely real estate and MSMEs. NBFCs would also benefit from RBI’s decision to link bank risk weights on NBFC exposures to the rating of such instruments. This would improve flow of bank credit to the better managed NBFCs, helping segregate the men from boys. This alongwith the harmonization of Asset Finance Companies (AFC), Loan Companies, and Investment Companies, into a single category would fastrack the process of consolidation in this space, as we have been expecting for some time.

Additionally we also welcome the relaxation in FPI limits investing in corporate bonds and feel that this is the right step towards deepen the Indian debt markets.

Hiral Sheth – HOD, Marketing, Sheth Creators

The first bimonthly RBI Policy announcement by newly appointed RBI Governor Mr. Shaktikanta Das, slashing the repo rates by 25bps to 6.25% is a welcome move/

The rate cut will definitely help in bringing down the home loan interest rates and would bring some amount of relief to the homebuyers. Also, banks should pass down the benefit to the homebuyers as this will encourage the buyers to buy their dream home.

Interest rate is one of the important factors that one looks at while buying a home as loan equated monthly installments (EMI) depend on that. So, as EMIs fall due to drop in interest rates, the demand for housing should rise.

“Faster GDP growth and declining interest rates will help real estate companies generate more sales and propel the growth of the industry.

Hari Prakash Pandey – Executive Director, Finance & Corporate Strategy, Runwal Group

The RBI’s move on slashing the repo rate by 25 basis points focuses on driving growth and is expected to infuse liquidity in the system. This will be a much-needed relief for the real estate sector as it will lead to lower interest rates for homebuyers. RBI’s decision will not only increase positive sentiments in the real estate sector but will also boost the residential demand going forward.

Sarojini Ahuja – VP, Sales & Marketing, Transcon Triumph.

The RBI’s decision on reducing repo rate by 25 basis points will make home loans cheaper, and also increase liquidity in the banking system. RBI has given positive signs showing that the market is improving and finally the financial institutions can now start on to pass the benefits to the end-users. Cheaper loans for home buyers and rising demand will create renewed interest in residential property purchase from end users.

Manoj Paliwal, Chief Financial Officer, Omkar Realtors

Apex bank’s move to soften the interest rates by 25 basis points is a good move, a much-needed impetus in the real estate sector. The move will ensure softening of lending rates and EMI’s will see some reduction whereby attracting more buyers to own the house. Secondly, the RBI’s decision to cut rates at regular intervals will improve the affordability quotient of Indian home buyers.

Anil Saraf, CMD, ASF Group says on RBI policy

“Given the evolving macroeconomic situation in India, the rate cut is an expected but encouraging move by the RBI. After a pro- middle class interim budget, reducing the Repo rate by 25 bps will, without a doubt, bring cheer to the real estate sector. Considering the inflation trends and CPI, this decision, while reducing the home loan rates, will also help in improving the liquidity in market. This move apart from providing the much needed impetus to the real estate and infrastructure sector, is expected to encourage home buyers, especially the fence sitters, to finalise their purchase decisions.”