Realtors’ chorus: hail Shaktikanta
The Reserve Bank of India (RBI) has once again decided to keep the benchmark repo rate unchanged at 6.5%. This marks the eleventh consecutive meeting with no change, as the central bank maintains a neutral stance amidst global uncertainties and domestic inflationary pressures.
The decision to hold the repo rate at 6.5% brings mixed sentiments for the real estate sector. While the unchanged rates ensure stability in borrowing costs for developers and homebuyers, the lack of a rate reduction means that existing home loan borrowers will continue to pay high Equated Monthly Instalments (EMIs). The rate hold also dampens hopes of increased affordability, which could have spurred greater housing demand.
However, developers remain optimistic about the sector’s growth, supported by government initiatives and the continued momentum in urbanization and infrastructure development. Experts point out that the current repo rate levels have already encouraged significant real estate investments, especially in the residential segment.
Prashant Sharma – President, NAREDCO Maharashtra
“The RBI’s decision to maintain the repo rate at 6.5% for the eleventh consecutive meeting reflects a measured approach to managing inflation without hampering economic growth. The neutral stance provides much-needed stability in the financial markets, which is crucial for the real estate sector. The unchanged rates will help maintain buyer sentiment, especially in the affordable and mid-segment housing categories. However, the industry continues to look forward to more government support, such as tax benefits and incentives, to further boost housing demand.
Kuldeep Jain, Founder & CEO of Build Capital
The RBI’s neutral stance and focus on balancing inflation and growth are positive signals for the real estate sector, ensuring stable home loan rates as well. With repo rates unchanged, stable borrowing costs will sustain momentum across residential and commercial segments. We urge the RBI to consider long-term measures to enhance liquidity and credit flow in the industry.
Vikas Sutaria, Founder, Iraah Lifespaces
=The decision to keep the repo rate unchanged is a welcome move, especially for the luxury and holiday home markets. Stability in interest rates enhances buyer confidence, particularly in emerging markets like Alibaug and Lonavala, which have been witnessing increased interest in these segments. The focus should now shift to infrastructure development and supportive policy measures to sustain demand.”
Anil Mutha – Chief Visionary & Co-Founder, Nandivardhan Group
The real estate sector appreciates the RBI’s commitment to maintaining economic stability. A neutral stance supports steady growth in home loans and project funding, ensuring that housing remains accessible. However, we believe a 25 bps rate cut would have been helpful to stimulate further growth in real estate.
Shraddha Kedia-Agarwal – Director, Transcon Developers
An unchanged repo rate allows the market to sustain its momentum, particularly in metro cities where housing demand continues to rise. The policy’s stability is a boon for luxury housing, enabling developers to plan innovative projects without the pressure of fluctuating interest rates. We hope to see further incentives to accelerate urban infrastructure development.
Rohan Khatau – Director, CCI Projects
The neutral stance taken by the RBI ensures predictability in the market, which is critical for sustaining homebuyer confidence. While the steady repo rate is encouraging, we also look forward to policies that could ease liquidity challenges and promote faster approvals for real estate projects.
Samyak Jain, Director, Siddha Group: The Indian economy has been resilient given the current geopolitical landscape and rising inflation across global markets. This move will usher in growth and maintain economic stability whilst enhancing consumer purchasing power, making it easier for individuals to invest in long-term assets like homes. For first-time homebuyers, this is an opportune time to take advantage of favourable borrowing conditions and secure their dream homes at more competitive rates.
Govind Krishnan Muthukumar, Managing Director & Co-Founder, Tridhaatu Realty
The RBI’s focus on balancing inflation and growth resonates well with the real estate sector’s goals. Stable borrowing costs will help developers cater to the growing demand for sustainable and climate-resilient housing. This policy is a positive step toward fostering investor and homebuyer confidence.
Vedanshu Kedia – Director, Prescon Group
The RBI’s balanced approach ensures that homebuyers remain confident, especially in the premium housing segment. This continuity is crucial for maintaining liquidity in the market and supporting long-term projects. Collaborative efforts from policymakers and the banking sector can further strengthen this positive trajectory.”
Abhishek Jain, COO, Satellite Developers Private Limited (SDPL): This prudent move will effectively control inflation while simultaneously fostering economic growth. By putting more money in the hands of consumers, it is expected to encourage homeownership and boost demand in the real estate sector.
Parijat Agrawal, Head of Fixed Income at Union Asset Management Company Private Limited-
The Monetary Policy Committee’s decision to keep the Repo Rate steady while reducing the Cash Reserve Ratio (CRR) by 50 basis points to ease tight liquidity conditions was in accordance with our expectations. The moderation in growth and the persistence of headline inflation are concerning factors that may necessitate timely policy support. Addressing the challenge of stimulating growth is critical and should not be overlooked. Core inflation has consistently remained below the 4% target for nearly a year. Looking ahead, food inflation is expected to ease due to lower commodity prices, a slowdown in demand as seen in GDP numbers, comfortable reservoir levels, seasonal drops in vegetable prices, and higher Kharif harvest. We anticipate a 25 basis points rate reduction in the upcoming February policy.”
Ashwin Chadha, CEO, India Sotheby’s International Realty: RBI’s decision to keep the repo rate unchanged is a balanced step in managing inflation. For the real estate sector, this stability ensures unchanged mortgage rates and supports the robust demand we’ve been witnessing in housing sales, particularly in the premium and luxury segments. With inflationary pressures under check and buyer confidence holding steady, we remain optimistic about continued momentum in the market, driving long-term growth.”
Vimal Nadar, Head of Research at Colliers India: The RBI, in its last MPC meeting of 2024, has maintained neutral stance keeping repo rate unchanged at 6.5%. The Central Bank taking note of recent aberrations in inflation and growth, has toned down FY 25 projections, revising GDP growth forecast downwards and inflation forecast upwards to 6.6% and 4.8% respectively. Stable repo rate translates into stability in interest rates and augurs well for the Indian real estate sector. Housing sales across major cities of the country are likely to end on a strong note in 2024. Additionally, developer confidence in residential and commercial segments will continue to reflect in healthy launches of residential units and Grade A office completions in the near term.
Shrinivas Rao, CEO, Vestian: As expected, RBI kept the repo rate unchanged at 6.5% for the 11th consecutive time, keeping the investor sentiment stable for real estate. This decision could be attributed to global macroeconomic uncertainty, escalating geopolitical conflicts, and headline inflation in October 2024 crossing the RBI’s upper tolerance limit of six percent. However, the central bank eased the monetary policy by reducing the CRR (Cash Reserve Ratio) by 50 bps to 4% as GDP slowed down to 5.4% in Q2 FY25. This may boost the liquidity in the market and help the GDP grow.
