Unchanged repo rate, Realtors rely on high consumer confidence

Real estate sector too is upbeat about economic growth

The RBI today kept the repo rate and reverse repo rate unchanged at 4% and 3.35% respectively. The Apex Bank also announced on-tap TLTRO for Rs 1 trillion at 4% till March 2021 and will conduct OMO worth Rs 20,000 crore next week. The RBI governor also announced that the RBI will take steps that will infuse liquidity to improve financial conditions. With the optimism of RBI for a strong rebound of the GDP and inflation to ease to projected target by Q4 of FY'21, real estate sector too is upbeat about economic growth. Prateek Mittal, Executive Director, Sushma Group, said, “At this time when the buyers are seeking stable investment options, real estate sector with low-interest rates emerges as the safest investment proposition and the all-time low repo rate is adding impetus to the same.”

Uddhav Poddar, MD, Bhumika Group & Founding Member, SCAI, said, "The real estate sector is badly affected due to the pandemic, and it needs support from the banks. One of the biggest issue with some of the realtors is the liquidity issue, and we hope RBI will address it as it has announced to take steps to ease liquidity.  One of the announcements that are beneficial for the sector is that the new housing loans to be linked to LTV only. We hope that the buyers will take advantage of the situation and realize their dream of owning a home."

The realtors feel that the RBI should have made some announcement to improve liquidity in the real estate sector, as many developers are facing the heat after COVID-19 led to complete shutdown of operations.  Nagaraju Routhu, CEO, Hero Realty, said, “Decision of the RBI to keep repo rates unchanged is along expected lines. RBI’s commentary on the economy gives hope for the revival of the real estate sector in the coming quarters. The sector, however, needs handholding by the Government and the RBI to tide over this difficult period. Measures to boost liquidity for the sector are urgently needed. The optimism about economic growth cannot ignore the needs of the common man who is still in ‘cautious spending’ mode. The good part is that the real estate sector is getting attention by the buyers as they have realized the safety of real estate asset, but they do look towards sops from the government that can help them in realizing their dream of owning a home.”

Ashish Bhutani, MD & CEO, Bhutani Infra, said, “The bank should have taken into consideration the need for liquidity. The apex bank has also talked about improving liquidity in the market, which will have a direct bearing on the real estate too. Like the RBI we too are optimistic about the economic growth. Having said that we were hoping for announcements that can specifically talk about various sectors and how banks are going to help improve growth. However, we are upbeat as the consumer sentiment is high, especially after they witnessed the brittle nature of other investment vehicles as against real estate.”

Saying that the decision to keep the repo & reverse repo rate unchanged underpins the accommodative policy by the government alongside reining the inflation rate, Ankit Kansal, Founder & MD, 360 Realtors, pointed out “This should have an overall positive impact on the recovering Indian Real Estate industry as the accommodative stance should plug-in the liquidity crunch in the market. Likewise, managing inflation will control the cost. At the same time, the RBI has announced a sharp GDP decline of 9.5% for FY 21, which is in line with what has been predicted by most of the major international & domestic rating agencies. Now all eyes would be on how the government plans to combat the economic slowdown and boost demand. A host of steps in the form of capital injection, refinancing of banking institutions, policy impetus, subsidies, and discounts are required to see a faster recovery.”

Pradeep Aggarwal, Founder & Chairman – Signature Global Group & Chairman - ASSOCHAM National Council on Real Estate, Housing and Urban Development, was of the view that "It was an expected move by the RBI to keep the repo rate unchanged, and it is commendable that it is doing its part to ensure that the economy stays on the right path. Loan on LTV will be helpful for the real estate sector, and it will help them get more loan amount."

Abhishek Bansal, Executive Director, Pacific Group, said, “The real estate market has started picking up as people are enjoying the low-interest rates and subdued pricing. The sector is also enjoying the fruits of the changed mindset of people towards owning a real estate asset, be it for living or earning extra income. The safety of real estate investment that came to the fore will gain steam during the festival season as fence-sitters too will come out in great numbers.”

Maintaining that the real estate sector is enjoying the fruits of high consumer confidence, Yash Miglani, MD, Migsun Group, said, “We were expecting the repo rate to remain unchanged, and the decision of the RBI will have no impact on the sector in the current scenario. In the latest announcement, the provision of housing loan to be linked with LTV is going to help the buyers, and hence the sector will see more sales.”

While saying that he understands the reasons for keeping the repo rate unchanged Harvinder Singh Singh Sikka, MD, Sikka Group, added “One favorable measure for the real estate in the latest announcement by the RBI is that the new housing loans will be linked on to loan to value (LTV). It will help the buyers get loans easily and realize their dream of buying a home. The buyers are already coming back to the sector and the coming festival season would be a lot better than the previous years.”

Agreeing with others Kushagr Ansal, Director, Ansal Housing & President, CREDAI Haryana, said, “The decision of the RBI to keep the new housing loans only to loan to value will encourage more buyers to come forward. The real estate market was looking good after the Unlock, and this particular step will make more fence-sitters to decide on buying a home. Apart from that, the good sign is that the apex bank is optimistic about economic growth. The measures that the RBI took in the last few months are showing a positive impact, and we hope that the latest decisions will help the economy recover faster.”

Raman Gupta, Director- Branding & Construction, GBP Group, was of the view that “It was an expected move to keep the economy on its path to revival after being hit by Covid-19. Over the past few months, people have realized the importance of owning a home and at this time when people are adjusting to the new normal, they have been seen exploring the stable investment options and real estate is topping the chart. The low-interest rates and onset of the festive season will bring cheers to the real estate sector. Apart from keeping the repo rate at as low as 4 pc, RBI has also announced that it is ready to take steps that will infuse liquidity to improve financial conditions and we are looking forward to its positive impact on the recovering Indian Real Estate sector.”

Rajat Goel, JMD MRG World, said, “RBI has kept the repo rate unchanged at 4% and reverse repo rate at 3.35%, during its recent announcement with the prediction of GDP decline about 9.5% for FY 21, which is on similar lines with the prediction from rating agencies. Affordable housing segment has seen a good number of enquiries from end-users amid the uncertain market conditions which is a sign of positivity. Apart from this, RBI’s decision to take steps for infusing liquidity remain awaited, which will prominently affect the overall sentiment of real estate sector.

Amit Jain, Managing Director, Mahagun Group, said, “The announcement was on the expected lines; the good thing is that the RBI looked optimistic about the economic growth, which is a good sign. Real estate sector has already started witnessing positive growth and is speedily recovering from the loss of lockdown. The momentum is picking up pace in this festival season as buyers are enjoying low home loan interest rates.”

Vikas Bhasin, CMD, Saya Homes, said, “We are optimistic that the measures announced by the RBI will help revive economic growth. Multiple announcements were made that will help other industries to go on a growth trajectory; this will have an indirect impact on real estate growth too as the sector is susceptible to economic changes. However, after the Unlock, the real estate is on a high note as people swarmed real estate sites to get hold of a property.”