RBI Monetary Policy August 2021: Real Estate Outlook

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The Monetary Policy Committee (MPC) in its third meet in the current financial year continued with the status quo on rates. NewsBarons connects with Real Estate industry leaders to share their views and opinions on the MPC announcement.

Highlights:

• Repo Rate retained at 4%
• Reverse Repo rate retained at 3.35%
• CPI inflation outlook at 5.7%
• Growth projections for FY22 retained at 9.5%

Low interest rates will augment home buying sentiments: Dr Niranjan Hiranandani

www.newsbarons.comThe sentiment seems to be quite optimistic with recurrent accommodative stance by 250 basis point reduction in Repo rate since FEB 2019 even in wake of inflationary pressure. This signals market buoyancy with steady economic recovery; regained momentum in Consumption in the wake of urban job stability leading to increase in private spending. The policy normalization and constant financial infusion is skewed towards healthy economic recovery with a positive GDP outlook pegged at 9.5% for FY 21-22. This will augur investment spurt and credit enhancement to the industry for an uptick in growth yield curve.

Increase in the retail home loans segment with less than 2% NPA is symbolic to the fundamental spur in housing demand that offers stability and security in challenging times. Further, the low interest rate will augment the home buying sentiment and facilitate financial cushion to log the deals in backdrop of festive tailwinds. Also, if regulators can enhance credit supply to the stalled projects via permitting more SWAMIH funds; will go long way in resurrecting the prolong sluggish real estate market and ensure customer delivery.

[Dr Niranjan Hiranandani is Managing Director of Hiranandani Group and National President of NAREDCO]

Extended period of historic low interest rates will aid the revival of real estate sector: Shishir Baijal

www.newsbarons.comWe welcome the RBI’s unchanged view on the ‘accommodative’ stance and commitment to maintaining the liquidity in the economy. Despite the inflationary pressures, RBI maintaining status quo on key policy interest rates and continuing with growth supportive policy stance was need of the hour. Extended period of historic low interest rates would ensure home loan rates remain at current benign levels and aid the revival of real estate sector. We have also seen many real estate developers refinancing their borrowings at lower interest cost and benefit from the lower interest rate regime, which is crucial at this juncture when business operations are facing the pandemic pressure.

In addition to this monetary policy intervention, the time is ripe for the RBI and Government to undertake more valiant demand stimulant measures to help the economy to cross FY20 GDP levels and ensure a broad-based revival. The lower interest rate environment and demand stimulant measures from Government coupled with the on-going vaccinations is likely to encourage businesses and consumers to avail credit to expand their business or fulfill consumption requirements, thereby stimulating the economy.

[Shishir Baijal is the Chairman & Managing Director of Knight Frank India]

We welcome RBI’s announcement of resuming fortnightly VRRR auctions: Anshuman Magazine

www.newsbarons.comThe RBI’s continued maintenance of an accommodative stance will help sustain homebuyer sentiments. The continued low repo and reverse repo rates (4% and 3.35% respectively) would mean that homebuyers would continue to secure loans at low rates, thereby boosting residential sales.

We also welcome the RBI’s announcement of resuming fortnightly VRRR auctions, which will further ensure that the market’s need for sustained liquidity is met.

[Anshuman Magazine is the Chairman & CEO, India, South-East Asia, Middle East & Africa of CBRE]

The unchanged repo rate regime works well for home loan borrowers: Anuj Puri

www.newsbarons.comHad it not been for the pandemic, the RBI could have taken a different stance for the benchmark rates today. However, the spectre of inflation in the country looms too large, prompting the RBI – as expected – to keep the repo rates unchanged at 4% and reverse repo rate at 3.35%. This is the seventh consecutive time that the RBI has maintained status quo, largely on account of the ongoing COVID-19 uncertainties.

On the upside, the RBI did confirm that economic activity is reviving with the ebbing of COVID-19 in most states across the country. Also, the real GDP forecast for the FY 2021-22 remains at 9.5% in the wake of the vaccination drive that is in full swing in India. All this is positive for the residential market, which has strong correlations to the overall state of the economy.

The unchanged repo rate regime works well for home loan borrowers as the floating retail loan rates, which is directly linked to external benchmark repo rates, have been at the lowest level in the last two decades. The continuation of this low interest rate regime supports the environment of affordability which has become the new hallmark of the housing market – during the pandemic, and even before.

[Anuj Puri is the Chairman of ANAROCK Property Consultants]

The focus should be on boosting growth with the right fiscal measures and policy support: Surendra Hiranandani

www.newsbarons.comThe Consumer Price Index inflation rate of more than 6% for May-June was beyond the Reserve Bank of India’s (RBI’s) tolerance mark. The RBI’s accommodative monetary policy and unchanged low-interest rates could become a challenge for it if inflation spikes again. While the status quo maintained by the RBI is appreciated, the focus should be on boosting growth with the right fiscal measures and policy support. This is especially important at a time when the International Monetary Fund has cut India’s growth estimate from 12.5% in April to 9.5% in July.

As the second wave of the COVID-19 pandemic comes to an end and supply chains show signs of recovery, the real estate industry is inching towards normalcy. We are hopeful that the RBI and the Central Government will make announcements that trigger demand and boost the residential market segment. Just like the fiscal measures adopted last year, we are keen to see steps that enhance the market’s momentum and spur greater economic growth.

[Surendra Hiranandani is the Chairman and Managing Director of House of Hiranandani]

The RBI has declared the accommodative policy stance amid the fears of the expected third wave: Sandeep Runwal

The RBI has declared the accommodative policy stance amid the fears of the expected third wave of the pandemic yet again. It is imperative that low mortgage rates would continue for at least some more time now or maybe until the end of the year. This will provide the required fuel for the growth of the economy along with the real estate industry with which several other allied sectors are linked. Apart from the low-interest rates, the consumers’ realization of owning a home along with the stamp duty cut in the key markets were the growth drivers for the real estate sector in the past few quarters and the strong demand is expected to continue going ahead.

[Sandeep Runwal is the Managing Director of Runwal Group and President-Elect of NAREDCO Maharashtra]

More efforts are needed to restore the supply-demand balance in the Real estate and Infra sectors: Rohit Poddar

www.newsbarons.comRBI’s decision to maintain the status quo keeping the repo rates unchanged at 4% indicates a continuation of its accommodative stance. Although, more efforts are needed to restore the supply-demand balance in the Real estate and infra sectors but continuation of lowest lending rates will ensure that businesses get more window to cope up with the pandemic related challenges. The decision comes at the peak of high inflation and slow growth with a concerning pandemic sitch around the globe. The yield curve and liquidity management were the central focus of the committee. However, we are evidently in a much better place compared to the past quarters. Nevertheless, we still need to be more cautious on the possibility of the third covid wave and its overall impact on the consumption.

[Rohit Poddar is the Manaing Director of Poddar Housing and Development Ltd.]

The decision of the RBI MPC augurs well for the real estate industry: Vikas Wadhawan

www.newsbarons.comOn widely expected lines, the RBI decided to maintain a status quo on key policy rates. The decision of the RBI MPC augurs well for the real estate industry in general and home buyers in particular, since the record low-interest rate regime would enable a large number of buyers to invest in property. Since homebuyer sentiment has already improved in recent times, based on an increase in housing affordability in India, the RBI move will prompt buyers and investors to put their money in secured assets like real estate. The extraordinary liquidity support the RBI has provided to the economy in the aftermath of the coronavirus pandemic is highly commendable.

[Vikas Wadhawan is the Group CFO, Housing.com, Makaan.com and Proptiger.com]

RBI’s accommodative stance is ideal to sustain a broader economic recovery: Kamal Khetan

www.newsbarons.comThe Reserve Bank’s accommodative stance is ideal to sustain a broader economic recovery. While the optimism about a steady economic recovery is gladdening, we believe that the recovery may need some more room from a good monetary-fiscal policy combination. The real estate industry is making recovery across many markets. With home loans still remaining at bottom levels, we believe the buying activity will soon be accelerated by those who have not used this favourable scenario to their advantage yet.

[Kamal Khetan is the Chairman and Managing Director of Sunteck Realty Ltd.]

Low-interest rates should continue preferably till the end of the year: Vinit Dungarwal

www.newsbarons.comAs was widely expected, RBI in its Monetary Policy Committee bi-monthly meeting, kept the repo rate unchanged at 4 per cent. From a real estate point of view, keeping the interest rates unchanged is a welcome move as it will help in demand creation. However, the Consumer Price Index inflation rate of more than 6% for May-June was beyond the RBI’s (RBI’s) tolerance mark. Hence, steps will have to be taken to keep the inflation in check and continue the growth momentum that the economy has gained post the second wave. For the real estate sector to have a strong H2, the low-interest rates offered should continue preferably till the end of the year.

[Vinit Dungarwal is the Director of AMs Project Consultants Pvt. Ltd.]

Strategic support in form of giving input credit on GST and lowered GST on raw materials will support sustainable long-term growth: Ramani Sastri

www.newsbarons.comWith economic recovery on a positive note following a second wave of Covid 19, growth needs to be carefully nurtured in the context of a relaxation in economic activities. This can be done by giving a fillip to the economy by incentivizing real estate. For this to happen, we expected a cut in rates which would have sent positive signals to economic and real estate players. Not only would the cuts have bolstered greater demand for homes as the interest regime would have been lower, there would have been greater infusion of capital in the market, enabling easier supply-demand transactions. The regular home buyer would ofcourse take advantage of low interest rates prevailing now, but the overall demand in the real estate sector at a holistic level would have gone up further, thus giving a fillip to the economy.

Fortunately, real estate has been one of the most resilient industries even amidst the pandemic and has been showing signs of recovery. Demand stimulant measures like credit subsidy or tax waivers even for a limited period can play a transformative role until we reach the pre Covid-19 normalcy thresholds. While the government has been introducing several initiatives to help the sector, some strategic support in the form of giving input credit on GST and lowered GST on raw materials etc. will support sustainable long-term growth and benefit the developers as well as homebuyers.

[Ramani Sastri is the Chairman & Managing Director of Sterling Developers Pvt. Ltd.]

A slight reduction in the key rates would have been widely celebrated: Lincoln Bennet Rodrigues

www.newsbarons.comKeeping in mind the current scenario, a slight reduction in the key rates would have been widely celebrated as low interest rates have been a crucial factor in the revival of the demand in the real estate sector overall. We have already seen early signs of improvement in economic activity following the easing of some restrictions post the peaking of the second wave. To bolster this growth and revive the economy, a rate cut would have further improved the liquidity situation, which is vital for the real estate sector. While the consumer is enjoying low home loan rates currently, a cut would have further intensified demand. A continuation of low interest rates regime works well for borrowers. There is a need for stimulant policy measures that would enhance and ease credit provisions and increases buyer’s confidence. Any announcements in these forms would have been appreciated.

As the nation recovers from the second wave of pandemic, there is a dire need to provide monetary policy support – on account of both easy availability and lower cost of funds – to households and businesses alike. A rate cut have made a world of difference for the end consumer as well as the investor. We would also like to see measures to enhance demand in the real estate sector by lowering of stamp duty and registration charges in the near future. While the impact of Covid 19 has been high on specific segments, the luxury and second home sentiment has not been impacted as much. The perception of lifestyle has changed in response to the new reality which is driving demand for premium properties. The luxury housing segment has remained largely insulated from the slowdown because the market is driven by end users at the top of the pyramid who have not been deeply impacted unlike other housing categories, where they had to defer purchase decisions.

[Lincoln Bennet Rodrigues is the Founder and Chairman of Bennet & Bernard Group]

Rising inflation and impending Covid third wave poses a worry for several stakeholders in Indian real estate: Abhishek Jindal

The RBI Monetary Policy Committee’s has, as expected, kept the repo rate unchanged as well as maintained the status quo in key policy rates, which comes as good news for aspiring homebuyers of the nation who can leverage the currently prevailing low home interest rates to get great property deals. While rising inflation and the impending Covid third wave poses a worry for several stakeholders in Indian real estate, but on the other hand, the homebuyers’ sentiment is gradually recovering and improving, and the RBI is also thankfully providing excellent liquidity support to the economy. Now with this latest MPC announcement, which relieves any major market uncertainty in terms of investments, we believe more investors and buyers would now be likely in the coming months to put their money in secure long term assets like real estate.

[Abhishek Jindal is the CEO of OwnersTown]

The need of the hour is industry-specific measures: Uddhav Poddar

www.newsbarons.comWhile a stable repo rate is appropriate, the need of the hour is industry-specific measures. We need to keep the buyers motivated, especially when the festival season is approaching. The requirement was to decrease the interest rates further to rekindle demand, making homes and real estate assets more appealing with low EMIs.

[Uddhav Poddar is the Managing Director of Bhumika Group]

The sector is expecting measures that could trigger sales: Amit Modi

www.newsbarons.comThe RBI’s goal is challenging since it must maintain its accommodative stance for as long as it is needed to stimulate and sustain growth and continue to offset the impact of COVID-19 while keeping inflation within the target range. However, no one can deny the importance of the real estate sector and its requirements. The sales are gradually coming back and looking bright, but the sector is expecting measures that could trigger sales in sync with the increased realization of the potentiality of real estate assets.

[Amit Modi is the Director of ABA Corp and President Elect CREDAI Western UP]

Additional reforms are required to allow the sector to thrive: Manoj Gaur

Manoj Gaur, Vice President, CREDAI National & MD, Gaurs GroupThe unchanged repo rate decision by the RBI is on the expected lines; the Apex bank maintained the accommodative stance that is the need of the hour. However, the real estate sector has been expecting sector-specific measures that could trigger healthy growth. Although the government has taken some steps to help the sector in recent months, additional reforms are required to allow the sector to thrive. The upcoming festival season will likely bring in more demand, and we are hopeful that the low home loan interest rate will make the buyers go for real estate assets”.

[Manoj Gaur is the CMD of Gaurs Group and Vice President – North, CREDAI National]

Real estate players are extremely optimistic about the festive months with renewed confidence: Aditya Kushwaha

www.newsbarons.comDespite the recent spikes in inflation, RBI has decided to maintain the status quo on the repo rate for the seventh consecutive time. By doing this, RBI has sent out a strong signal that growth is important. It has also maintained FY22’s GDP growth forecast at 9.5 per cent, which is another positive sign. The second wave had cast a major impact on the homebuying sentiment. However, the activity has started gaining momentum in the real estate sector in the last month. The home loan interest rates are at a historic low, the real estate players are extremely optimistic about the festive months with renewed confidence. Keeping these rates unchanged will prompt more buyers to invest in secured assets like real estate. For the upcoming season, real estate players including us are looking forward to launching new projects.

[Aditya Kushwaha is the CEO and Director of Axis Ecorp]

We appreciate the apex bank’s continued accommodative stance: Pradeep Aggarwal

Pradeep Aggrawal, Co-founder & Chairman, Signature Global and Chairman, National Council on Affordable Housing, ASSOCHAMWe appreciate the apex bank’s continued accommodative stance. Real estate has made a strong demand for low house loan interest rates, and the RBI has helped the sector by maintaining the status quo. We recommend that customers take advantage of the current scenario because, in the future, prices may rise due to higher raw material costs.

[Pradeep Aggarwal is the Founder and Chairman of Signature Global and Chairman, National Council on Affordable Housing, ASSOCHAM]

The market is buoyant and picking up the pace that will improve with the festival season: Rajat Goel

www.newsbarons.comOver the past few months, low home interest rates have worked well for the affordable housing buyers; the continuation of the scenario is good news for the segment, which attracts maximum demand. The market is buoyant and started picking up the pace that will improve with the festival season. We are anticipating good sales as people would like to benefit before the rates start increasing.

[Rajat Goel is the Joint Managing Director of MRG World]