Cash-starved realtors expressed disappointment over the RBI’s decision on Thursday to keep the benchmark lending rate unchanged and said the apex bank should have cut repo rate by 1 percentage point to boost housing sales and economic growth.
“India Inc. was expecting a rate cut of 100 basis points instead of small tinkering such as a rate cut of 25 basis points, which would have provided a boost to the government’s recent initiatives to kick-start GDP growth,” NAREDCO president Niranjan Hiranandani said.
“The decision to wait and watch the outplay of previous cuts will go against the current sentiments. The markets overall are disappointed,” he said, adding that real estate developers are facing liquidity crunch.
Knight FRank India CMD Shishir Baijal said the RBI’s decision to not lower interest rate has come “as a surprise and a bit of a disappointment to the industry”.
“Lower interest rate would have helped push up credit demand and investment in the economy, aiding overall economic growth. It would have provided much required reprieve to some ailing sectors like real estate and auto,” he added.
Anarock chairman Anuj Puri said, “From a real estate point of view, rate cuts are obviously always welcome as they help improve overall sentiment. The expected rate cut of 25 basis points would have caused home loan values to fall below 8 per cent for first time ever”.
Sanjay Dutt, MD & CEO, Tata Realty & Infrastructure Ltd, said, “This time while the focus of the RBI remains to be on reviving the economy, we are disappointed to see no change in the policy rate”.
The real estate industry, in particular, has been facing some difficult times and with inventories piling up the need to push demand and encourage purchase is now more than ever, he added.
However, Anshuman Magazine, chairman & CEO, India, South East Asia, Middle East & Africa, CBRE, said the RBI’s decision to keep the repo rate unchanged was an indication towards the government’s focus on the evolving inflation-growth dynamics.
JLL India CEO & country head Ramesh Nair said the central bank, by keeping the rates unchanged, had recognised that the need of the hour was to infuse confidence about the economic growth through a holistic approach.
“The decision to maintain policy rates augurs well for the economy as the recently introduced policy reforms will take time to pan out and materialise. The economy needs to absorb the impact of the recently introduced reforms and the previous rate cuts. The real estate sector is expected to pick up due to the favourable policy incentives and the faster transmission of previous rate cuts,” he added.
With concern over rising food prices, Elara Technologies CEO Dhruv Agarwala said, “Under the circumstances, the apex bank had little option but to maintain status quo with regard to the repo rate.”
News Corp and Softbank-backed Elara Technologies owns Housing.com, PropTiger.com and Makaan.com real estate portals. Sankey Prasad, managing director & chairman, Colliers International India, said the government along with industry experts should identify and resolve other sensitive issues effecting the sector.
Gaurs group MD Manoj Gaur stressed on effective transmission of 135 basis point cut in repo rate this year.
“Industry was expecting a rate cut as that would have somewhat provided a positive sentiment to the housing sector. Any positive news on borrowing interest rates would have provided the sector an upward trigger,” said Samir Jasuja, Founder and MD, PropEquity.