The RBI maintained status quo as the MPC voted unanimously to hold rates steady. The repo rates have kept unchanged at 4%, and the RBI expects positive growth in Q3 and Q4. The real estate sector was expecting some additional announcements; however, the sector has to rely on the announcements made in the last few months only. Real estate experts feel that the demand is high, and the latest status quo of the RBI will not have any negative impact on it.
The announcements of repo rate cuts by the apex bank during the lockdown have helped the reeling sector of real estate. Apart from the rate cuts, RBI has also gone ahead with measures such as rationalization of risk-weightage norms, restructuring of loans based on the projects, linking home loans to LTV, the intensity of policy changes made within a span of few months reflect the positive intent of authorities to support major sectors like real estate. "The onus to lend continuous support lies entirely on banks' quick disbursal of funds. Home loan interest rates are at their lowest, which has already shown a positive impact during the festive months in the residential segment. The upcoming quarter is likely to witness more of it and register a positive curve," says Yash Miglani, MD Migsun Group.
Maintaining that the RBI's recent decision to maintain the status quo was expected due to the pace observed in the market around festive times, Vijay Verma, CEO, Sunworld Group, says, "Apex bank has also gone beyond the usual changes and introduced notable policy changes over the past few months, aiding both buyers and developers. This has brought a certain extent of vibrancy in the market, post the stillness in the market that lasted almost a quarter. The flexibility to cut rates if the economy needs support indicates a positive signal for the future. Residential real estate backed with festive offers and deferment payment plans has been fairing well post-unlock. We are hoping with GDP growth for 2021 projected at -7.5% the realty sector can contribute a significant share in the overall economic development."
The sector is already optimistic, and the sales figures over the last few months are an indication that buyers are enjoying the low home loan interest rates. "Real estate sales have improved, especially after home loan interest, and it will further improve if other states reduce stamp duty after the announcements made by Maharashtra, Karnataka, and Madhya Pradesh. The sector will benefit a lot as the demand is already high and reduction in stamp duty will provide a further boost," says Ashok Gupta, CMD, Ajnara Group.
Talking about the commercial segment, Sagar Saxena, Project Head, Spectrum Metro, says, "We are happy that the RBI is optimistic about the GDP growth. The foremost beneficiary of such a positive outlook in real estate would be the retail segment as it depends on consumer spending and business expansions. The demand for office spaces and commercial places is already witnessing a significant jump, and people are coming out to spend in malls."
Adds Ashish Bhutani, MD, Bhutani Infra, "For the commercial segment, we were expecting that the RBI would come up with specific announcements that could boost investment. However, we understand the status quo stance as there was limited possibility of changing the repo rate below 4%. Last substantial announcement for the commercial segment was in February when the RBI permitted an extension of date of commencement of commercial operations (DCCO) of project loans for commercial real estate. The segment is in dire need of liquidity, which also depends on the priority lending status, and we hope that the segment will get adequate liquidity as the RBI in this MPC announcement has said that it will maintain the liquidity in the market."
Commenting on the latest stance of the RBI, Dhiraj Jain, Director, Mahagun Group, says, "The government and the bank have taken multiple steps in the last few months. If quick implementation takes place, then many problems will get resolved. One such announcement was the loan restructuring that will help stuck projects bringing in more projects in the market. The Apex bank has shown positive outlook for GDP growth in the coming quarters, and this would definitely have a healthy impact on the real estate sector too."
In the last few months, the government and the RBI took decisions intended to move towards the path of economic recovery, and real estate was looking for packages that can help them speed up the pace. Ankur Bhatiani, Director, Urbainia Spaces says, "Though we understand the stance taken by the RBI, we still feel that real estate sector needed announcements that could have an immediate impact on delivery and sales. Now, the need is that RBI should ensure that the past announcement should get implemented with earnest. The sector has yet to see the major impact of those announcements. We hope the individual banks will take necessary steps and keep the real estate sector in their priority lending list."
Realtors say that buyers are now back, and the sector will now depend on the delivery of the projects to instill more confidence in the market. Harvinder Singh Sikka, MD, Sikka Group, says, "We were following the various reports, and were ready for the status quo of the RBI. We feel that the sector, which contributes towards the economic growth of the country, should get special attention. The RBI should ensure that banks extend lending support to the sector."
Dhiraj Bora, Head-Marketing and Communication, Paramount Group, adds, "We should praise the RBI for extending a helping hand to the real estate sector as it has taken care of the interest of buyers and developer in the last few announcements. Till the next announcement, the sector has to work on deliveries and employing marketing tools that can augment the increased demand."