Real estate players are optimistic that the third policy rate cut by the Reserve Bank of India this year will add momentum to the slowly reviving realty market.
“There is an overall increase in market momentum in terms of commercial leasing, employment, etc. but the residential market has still not picked up to its earlier level. The rate cut will help reduce the overall burden for the residential buyers and may boost residential sales across the markets,” Surabhi Arora, of Colliers International said.
Developers hailed the move saying banks too, on their part, must pass on the benefit to customers.
Pradeep Jain, Chairman, Parsvnath Developers, said, “We were expecting the move considering the realty sector has been struggling for the last few quarters with increasing inventories and low demand. We hope that more banks will now pass on the benefit to customers, thereby stimulating the overall demand.”
Shrikant Paranjape, Chairman, Paranjape Schemes, said, “The move will also quench a small thirst for buyers when it comes to pay the increased service tax.”
Brotin Banerjee, MD and CEO, Tata Housing Development Company, said, “The monetary policy has been a good initiative to tackle the problem of medium-term supply side constraints given the slow pace of economic revival in the country. However, depending on the revival in the fiscal condition of the economy we are hopeful of further rate cuts.”
Shishir Baijal, CMD, Knight Frank India, “We also think that an additional reduction in the CRR would have given a bigger boost to the struggling real estate sector by improving its cash crunch scenario. Moreover, it could have also increased the possibility of banks slashing their lending rates to benefit their borrowers.”
Corporate lending and demand revival
Sachin Sandhir, Global Managing Director – Emerging Business, RICS said, “With the rate revision, it is likely that there will be a surge in corporate lending. This would benefit the real estate and construction sector firms too.”
Prashant Tiwari, CMD, Prateek Group said, “This repo rate cut by the RBI will further reduce the cost of funds to home-buyers as well as developers as it will allow banks to lower the interest rates. This will ensure heightened property demand in the coming times.”
Sanjay Dutt, Executive MD, Cushman & Wakefield said, “Although demand from end-users may take a bit longer to actually transform to active buying, home buyers’ interest may be rekindled and inquiries may increase in the short term as buyers may begin anticipating lower interest rates. The cost of borrowing could also decrease marginally for developers.”