Real Estate Industry Welcomes RBI Accommodative Stance

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The RBI maintained status quo as the MPC voted unanimously to hold rates steady. The repo rates have kept unchanged at 4%, and the RBI expects positive growth in Q3 and Q4. The real estate sector was expecting some additional announcements; however, the sector has to rely on the announcements made in the last few months only. Real estate experts feel that the demand is high, and the latest status quo of the RBI will not have any negative impact on it. Manoj Gaur, MD, Gaurs Group & Chairman, Affordable Housing Committee, CREDAI – National said, “real estate will benefit from the Apex bank’s stance that it will use various instruments at an appropriate time to ensure ample liquidity is available in the system. The sector has repeatedly been saying that one of the major concerns is the liquidity, and things will be sorted if the RBI can ensure liquidity for the real estate sector. The demand for real estate assets is already high, and with low home loan interest rates, we see increased sales in the coming quarter. However, we were hopeful that the RBI would take a call on Input Tax Credit, which would have helped the buyers get more benefit.” “The Reserve Bank of India needs to have a hawkish stance while looking at the inflation figures and try to taper it further in order to mitigate the supply-side pressure. Pro-active stance of the government to tackle the supply side issues would be instrumental in reducing the food prices further. As the numbers show that the economy is recuperating at a quicker pace than anticipated is a very good sign. There are several sectors which are showing an upturn consolidating the fact that the GDP growth numbers would be positive soon. Home loans will continue to remain at attractive rates, this should augur well for home buying sentiment, stated ASSOCHAM & NAREDCO National President, Dr. Niranjan Hiranandani.” “The affordable housing segment is already enjoying the increased demand, and the latest unchanged stance of RBI will not have much impact on the demand per se. In fact, the growth projections of RBI will instil positive sentiment in the market, which will translate into good numbers for the real estate sector too. If economy recovers, which is likely after the RBI said in the MPC review that it would maintain liquidity in the market, and the job market remains vibrant, then the affordable housing segment buyer will expedite the process of owning a property. Right now, we would say that we completely understand the stand taken by the RBI in this MPC, and hope that growth projections improve leading up to a vibrant market for the real estate sector” concluded Pradeep Aggarwal, Founder & Chairman – Signature Global Group & Chairman - ASSOCHAM National Council on Real Estate, Housing and Urban Surendra Hiranandani, Chairman & Managing Director, House of Hiranandani said, “RBI’s decision of keeping the repo rate unchanged was on expected lines owing to the rise in inflation in recent months. Even though the apex bank has kept rates unchanged, we still believe that there is room for financial institutions to cut down on their lending rates. Now the entire focus would be on how the government plans to combat the economic slowdown and boost demand. A series of measures in the form of capital injection, refinancing of banking institutions, policy impetus, subsidies, and offers are required to see a faster recovery. Country's economy recovered faster than expected in the July-September quarter. The growth in the economy has also been reflected in the real estate activities of the last quarter where both residential as well as commercial markets have seen a sharp increase in activities. Reduction in stamp duty charges in some states and varied offers during the festive season coupled with a rate cut would have surely boosted the buyer sentiment further. Serious buyers have realized that this is the best time to buy. Sanjay Dutt, MD & CEO, Tata Realty and Infrastructure Limited expressed, ““For the third time in a row, RBI has decided to keep the repo rate unchanged at 4 per cent while maintaining an accommodative stance. Inflation and early bounce in some sectors perhaps requires this stance. The timely intervention during the beginning of pandemic did provide relief to the sector by enabling homebuyers to borrow at sub 7% interest rates and benefits extended for affordable homes. The Government has acknowledged importance of the real estate sector by introducing various measures such as the 20% circle rate exemption. This move clearly amplifies required correction in ready reckoner across several States. However, it is high time to truly unlock the potential of the sector by taking specific initiatives such as capital provisioning requirement for the banks to lend to the real estate sector till 100% and there is no linkage to rating of the company. We look forward to the permit for ECBs to be completed, leased out and income generating commercial assets. Remove listing requirements for FPI Bonds where end use is land acquisition. We are thankful to the Government for helping the sector grow in this new normal and look forward to their continued support.” Ankush Kaul, President (Sales & Marketing) - Ambience Group added "The constant vigil shown by the RBI is welcome. The decision to leave the key policy rate unchanged comes on expected lines. While the government and the RBI has been doing a lot, rising inflation, especially, for food items, commodities remain a big concern for people in general. There is a need to put a check on spread of COVID and disruptions like the farmers’ protest etc. These may collectively dampen the festive spirit and the upswing in home buying that we witnessed a few months back. The industry and the government should strive to revive homebuyer’s sentiments." Ashish Shanker, Deputy MD & Head of Investment, Motilal Oswal Private Wealth Management feels, RBI have prioritised growth over inflation. “This is an acknowledgment that inflation drivers seem to be more supply side led. An accommodative liquidity stance will ensure access to liquidity will not be a challenge and the ongoing recovery continues to gather steam. This will help push through govt borrowings in a year where the revenues are under pressure. Guidance is better than earlier on growth and flows. Positive for markets.” Anurag Mathur, CEO, Savills India was of view that with the RBI keeping the lending benchmark lending rates unchanged, home loan interest rates are likely to stay at an all-time low and complement the other recent measures announced by the government, especially in the last stimulus package. Maintaining an accommodative stance is significant as it emphasizes the central bank’s focus on spurring demand which remains the highest economic concern at the moment. Additional allocation towards the PMAY-U and tax relief measures are a right step in revitalising the residential segment in a post-pandemic era. Fund infusion into the NIIF debt platform is also likely to benefit the real estate segment in an indirect and discreet manner.” Dhruv Agarwala, Group CEO, Housing.com, Makaan.com and Proptiger.com: shared, “The RBI move to maintain status quo on policy rates was expected in the face of persistently high retail inflation and an already record low REPO rate of 4%. The earlier measures announced by the RBI, including the rationalization of risk-weightage norms for home loans linking it to LTV and restructuring of loans to developers on a project basis, will continue to help the housing sector. Interest rates on home loans are already at sub-7% level, with banks offering further sweeteners such as processing fee waivers among many others. We hope banks will continue to lend vigorously to the real estate sector, the second-largest employment generating sector in India.”