Realty sector disappointed with RBI move

Real estate sector, which has been in a sluggish mode for couple of quarters, is disappointed with the RBI keeping the key repo lending rate unchanged at 6.75 per cent. Several industry watchers said the sector was anticipating a further rate cut.

Niranjan Hiranandani, MD, Hiranandani Communities, and President, NAREDCO West , said: “The RBI Governor has kept the key repo lending rate unchanged at 6.75 per cent, but this follows a big cut two months ago. I would take a cautious note on potential for further reduction in rates, given that India aims to meet its 2017 inflation target as also braces itself for the possible impact of the US rate hike.”

Manju Yagnik, Vice-Chairperson, Nahar Group , said: “The real estate sector was expecting a further rate cut at this stage which would have helped in improving market sentiments, bringing some respite to customers with home loans as well. Given the current property rates and stagnant market conditions, a rate cut would have sent out a positive signal to home buyers and industry alike and would have given the much needed thrust to the realty sector.”

Anshuman Magazine, CMD, CBRE South Asia, said, “The multiple rate cuts initiated by the RBI through the year have provided some relief to the economy and the real estate sector. While it will take some more time for the announcements to reflect at the ground level, the housing segment has seen stability and improvement in market sentiments. As we move into the New Year, we hope the RBI will continue to monitor the situation and make necessary adjustments to boost the economy.”

"The real estate industry is disappointed with the RBI announcement on unchanged monetary policy. The industry was hoping for a marginal rate cut which was the need of the hour. Even a small rate cut would have given a right signal about downward trend in interest rates and created an optimistic environment among buyers and encouraged the fence sitters to take a positive decision,” said Rajesh Prajapati, MD, Prajapati Constructions .

Ashwin Sheth of Seth Developers said, “Though a balanced move, RBI could have done much more. However, the rate cut would have helped in lowering the home loan interest rates making home buying a reality for most buyers who have been eagerly waiting for the rates to cut down.”

Shishir Baijal, CMD, Knight Frank India , said: “The current stance of the RBI also underlines its concern that despite a total of 125 bps cut in the repo rate by the RBI till September 2015, banks have not yet transmitted enough the benefits to the end consumers. In real estate we do not see any dampening of spirits as a total of 125 bps cut in the rates is already done across the year and now much depends on how banks transmit the benefit to home buyers. Further, regardless of this cumulative cut, banks on their own should be able to transmit more benefit to the end consumers as the cost of funds is becoming cheaper with improved liquidity conditions.”