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Realtors expected more from RBI MPC

Posted On: 2021-04-07 04:37:54 (Time Zone: Arizona, USA)

The RBI has maintained its accommodative stance until it sees an appropriate time to drive economic growth without jeopardizing its key goal of taming inflation. With the recent increase in Covid 19 incidents, the Apex bank is faced with the challenging task of balancing inflationary pressures to avoid a rise in borrowing costs. To keep inflationary pressures in check and sustain financial stability, it is expected that the central bank to pursue policy normalization in the second half of FY22. While it is understandable that the repo rate remains unchanged, the real estate sector's need for special steps cannot be overlooked.

Ashok Gupta, CMD, Ajnara India, adds, "The repo rate remains unchanged at 4% which is the sixth time in a row, but we can still expect some support from the Union government and RBI in their upcoming policy meetings to help the industry recover. Its accommodative stance is positive for the real estate sector, which has witnessed some positive movement in demand for the past few months. We can hope that banks will lend strongly to support the sector, leading to the crucial sector in Indian Economy to attract borrowers, as earlier several banks have already provided some exemptions on transaction fees and other related costs."

Praising the unchanged repo rate step, Vijay Verma, CEO, Sunworld Group, said, "It will continue to give the required liquidity cushion to the sector, where leverage plays an important role. The accommodative stance of the RBI repo rate move to keep it unchanged was much expected because earlier, there were no such announcements made, especially for the real estate sector in the last Union Budget. With this move of RBI, a great relief to the sector in the new financial year is likely to prevail."

Buyers are returning to the sector after realizing the value of real estate assets backed by historically low EMIs, but developers, too, need some assistance to speed up the development process. "A sector that contributes significantly to the GDP requires assistance, and developers are expressing their concerns for the government to pay attention to their demands," says Dhiraj Bora, Head Marketing & Communication, Paramount Group.

Because of the global pandemic crisis, the world is suffering one of the worst economic crises, and real estate, among other industries, is feeling the pinch. Harvinder Singh Sikka, MD, Sikka Group, says, "Rates on repurchase agreements are now at record lows, benefiting consumers. However, real estate is undergoing a difficult era, and we hope that the RBI will come out with some direct measures that would help the sector prosper."

Realtors unanimously say that they expected that the RBI would keep the repo rate unchanged. Throwing light on the RBI MPC decision Uddhav Poddar, MD, Bhumika Group, says, "The Apex Bank has kept its repo rate unchanged, which was in line with expectations. it's clear that the apex bank is taking an accommodative stance. The RBI has played a pro-active role and has taken multiple measures for various industries and sectors in recent months. While the real estate sector needs several measures, and we expect a push from RBI to the banks to disburse loans to the sector".

The need was the influx of funds that could help the developers complete the projects on time and gain the trust of buyers, resulting in the sector's revival. "Last-mile financing is needed in real estate, and unpaid loans are a roadblock; one-time loan restructuring would force banks to accept developers' collateral conditions, allowing developers to complete stalled/delayed projects. The situation in 2008 emerged as a result of the Lehman Brothers crisis, and at the time, loan restructuring assisted in reviving the market, which saw property capital appreciation in 2010 after a two-year lull. We are now in a similar situation, and the sector needs government assistance," says Dhiraj Jain, Director, Mahagun Group.

Kushagr Ansal, Director, Ansal Housing, adds, "We expect the new lending support of Rs 50,000 crore to Nabard, NHB, and Sidbi to have a positive effect on the liquidity situation. We must realize that the sector needs assistance in coping with unfinished projects to close the demand-supply gap. Since people realized the value of real estate properties, demand is at an all-time high, and the developer community needs the government's support to ensure that everybody has a home."

Calling for the need to announce direct packages for the sector, Sagar Saxena, Project Head, Spectrum Metro, says, "It is time for the government to pay heed to the sector's long-standing demand for industry status. We foresee the government taking direct sector-specific steps rather than delivering packages with limited effects on real estate."

Concludes Vikas Garg, Deputy MD, MRG World, "While the government has taken some measures in recent months to help the sector, such as introducing stress funds and stimulus packages, further changes are required to help the sector grow. Without sufficient government funding for developers, it would be difficult to retain real estate demand."

Source: Equity Bulls

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