The decision by the Reserve Bank of India (RBI) Monetary Policy Committee (MPC) earlier this month, to retain the interest rates has evoked positive reactions from real estate sector analysts and association heads.
Dr. Niranjan Hiranandani, Chairman, NAREDCO, explained that bank deposit trends reflect volatility in rates and markets, with customers more actively managing their cash to make the most of varying economic conditions. Consumers are skewed to park their funds in physical assets like real estate, which is on an upward growth trajectory after a sluggish decade. As a result of the rising demand for residential, commercial, and retail properties, a supply funnel is brewing with a slew of new projects underway. REITS, fractional ownership, and other methods of investing in quality real estate have rekindled the interest of the investor class in real estate.
“The new government must set a tone that aligns with market expectations after the unprecedented conclusion of the Lok Sabha election in 2024. At the moment, markets anticipate a swift shift towards lowering interest rates as inflation is within controllable bands. Amidst the Federal Reserve’s pause in the rate-cut cycle, Indian economy watchers are intrigued by changes in both the domestic and geopolitical landscapes. The industry expects the new government to lower interest rates, announce fiscal incentives, and rationalize taxes. This will stimulate sustained economic growth and reinforce confidence among the diverse stakeholders. Bottom line, an accommodative monetary policy along with a proactive government stance will bode well for the Indian economy,” he said.
G Hari Babu, National President, NAREDCO, pointed out that by keeping the inflation projection steady and maintaining the repo rate at 6.5%, the central bank is signalling its dedication to bolstering the economy and maintaining stability. This is particularly encouraging for both luxury and affordable housing developers alike.
“For the average homebuyer or developer, this is excellent news. It implies that borrowing costs will stay relatively affordable, potentially prompting more individuals to consider property investment. Moreover, with core inflation easing and fuel prices decreasing, consumers may find themselves with extra funds to allocate towards a down payment or home enhancement venture. Additionally, the commitment to stability extends to sustainable practices within the housing sector. Developers are increasingly embracing environmentally friendly initiatives, which not only align with global sustainability goals but also appeal to socially conscious buyers. This alignment with sustainable development objectives further enhances the attractiveness of real estate investments,” he said.
Prashant Sharma, President, NAREDCO Maharashtra, opined, “We welcome RBI’s decision to maintain its current policy rates amidst the backdrop of volatile food prices, ongoing geopolitical tensions, and the Federal Reserve’s extended pause on interest rates. It is crucial for the
RBI to continue monitoring the evolving economic landscape, particularly in the aftermath of the Lok Sabha elections and the upcoming Union Budget. The policies and fiscal measures introduced next month will play a significant role in shaping the trajectory of our economy. A balanced and forward-looking approach will be essential to support sustained growth and stability in the real estate sector and the broader economy. We remain optimistic that the RBI, with its vigilant and adaptive stance, will continue to foster an environment conducive to economic resilience and development.”
Pritam Chivukula, Vice President, CREDAI-MCHI, concurred. “We commend the RBI for its prudent and cautious approach amidst the current economic landscape. Post the Lok Sabha elections and as we anticipate the Union Budget next month, it is crucial for the central bank to closely monitor the evolving economic policies. The direction set by these policies will play a significant role in determining future rate decisions. We appreciate the RBI’s continued commitment to maintaining economic stability and look forward to seeing how these developments will shape the economic environment in the coming months. We are confident that the RBI’s careful and considered approach will support the broader economic goals of the country.”
Anuj Puri, Chairman, ANAROCK Group, underlined that the RBI’s decision to keep the repo rate unchanged is a boon for the Indian real estate sector. This stability ensures that home loan interest rates remain low, making housing more affordable for potential buyers.
Going forward, the real estate sector is hopeful of the RBI announcing a rate reduction once the economy supports such a step. Let’s wait and watch!
