Monetary Policy April 2021 – Real Estate Outlook

The RBI Monetary Policy Committee (MPC) decided not to change the repo rate, while maintaining an accommodative stance, inline with the expectations of the real estate sector.

NewsBarons presents the views of leading real estate developers on the announcement and its impact on the real estate.

RBI has done well to convince the market about its stance on growth and liquidity management: Dr. Niranjan Hiranandani

www.newsbarons.comThe unchanged repo rate by the RBI MPC signals to keep the borrowing momentum buoyant. Also, pegging the real GDP forecast at 10.5 percent reflects Indian economic recovery to be healthy, self-sustainable and resilient.

An additional liquidity facility of INR 500 billion to all India financial institutions like NABARD, NHB and SIDBI augurs well towards fuelling sustainable growth measures. On the issue of keeping markets ‘in sync’ with its policies, the RBI has done well to convince the market about its stance on growth and liquidity management.

The guidelines on inflation and growth trajectory have mostly remained unchanged despite recent surge in input costs. Extending LTRO for six months translates into continued emphasis on maintaining balanced liquidity in the system by and introducing secondary market G-sec acquisition program 1.0 certainly clearly reflects the commitment to sustain growth momentum in the economy. Extension of Priority Sector lending for NBFC financing towards housing will augment the production outlay.

[Dr. Niranjan Hiranandani is the National President of NAREDCO and MD of Hiranandani Group.]

RBI Monetary Policy Springs No Surprises : Anuj Puri

www.newsbarons.comAs expected, the RBI kept the repo rate and the reverse repo rates unchanged at 4% and 3.35% respectively while maintaining an accommodative stance, with a view to aid the economic recovery process. With consumer inflation still trending at the upper end, the RBI intends to keep an eye on it in the coming months. India is witnessing its worst second wave of COVID-19, thereby raising some uncertainty. On a positive, the real GDP forecast for the FY 2021-22 remains strong at 10.5% in the wake of the vaccination drive that is in full swing in India.

While repo rates will remain the same and home loan rates may remain stable, the incentive period for lower rates (starting from 6.7%) expired on March 31. SBI has already reverted to their normal rates and other banks will also follow suit. This may have some impact on the housing demand, especially in Maharashtra where the stamp duty cuts coupled with lowest-ever home loan rates had significantly boosted housing demand.

Now, with stamp duty cuts not being extended and benefits of lowest-best home loan rates also being rolled back, we may see some decline in overall sales volumes.

[Anuj Puri is the Chairman of ANAROCK Property Consultants.]

A welcome move with the aim of ensuring economic revival: Anshuman Magazine

CBRE Budget 2020 newsMaintaining a status quo for the fifth time, the RBI’s decision of keeping the repo rate unchanged at 4% is a welcome move which has been undertaken with the aim of ensuring economic revival, while ensuring that inflation remains within the target going forward. In addition to maintaining its accommodative policy stance, the Central Bank has also announced additional measures such as special liquidity facilities for all India financial institutions including INR 10,000 crore for the National Housing bank (NHB), timeline extensions of six months for banks on-lending to NBFC’s, constitution of a committee to comprehensively review the working of asset reconstruction companies (ARCs), extension of TLTRO On Tap scheme deadline by six months, amongst others. These measures are likely to assist the revival of the real estate sector while fast tracking economic recovery.

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

The equity markets will cheer with the announcement on RBI’s Government Securities Acquisition Programme: Rohit Poddar

www.newsbarons.comThe first RBI policy of FY’22 with its continued accommodative stance to maintain liquidity surplus in the market can be viewed as being pragmatic. Though the RBI moves away from time-based guidance, it has prudently provided timelines to its liquidity-focused measures providing cushioning to the financial markets.

The equity markets will cheer with the announcement on RBI’s Government Securities Acquisition Programme. This will ensure government borrowing at a low cost and be able to address pandemic-related adversities from both economic and healthcare aspects.

From a real estate point of view, an additional INR 10,000 crore for NHB for fresh lending will create a seamless environment to sustain the business operation. As a major part of credit borrowing happens from NBFCs in the real estate sector, the extension provided till 30th September will boost liquidity even further.

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

Developers and homebuyers are looking up to the government for support: Sanjay Dutt

Monetary Policy February 2021The real estate sector was just beginning to recover from its long slump, courtesy of the government’s efforts including accommodative stance on repo rate, introduction of stress funds and stimulus packages. This enabled developers to come up with attractive schemes to help homebuyers invest in their safe havens amid the pandemic. However, with the second wave of Covid-19 cases after a year of lockdowns and uncertainty is worrying as it might cause a relapse. With these challenges in the backdrop, we are extremely thankful to the apex bank for its decision to keep the repo rate and reverse repo rate unchanged at 4 per cent and 3.35 per cent respectively. This is the fifth time in a row that the government has tried to maintain an accommodative stance and it will certainly play an important role in the long-term recovery of the sector.

Considering that real estate forms the backbone of several other sectors, we urge the government to introduce measures that truly uplift the sector, such as granting of industry status, allowing FDI in RTMI projects and extending the tax benefit from affordable to mid housing. Developers and homebuyers are looking up to the government for support and we truly appreciate all the agile and thoughtful efforts being taken to support the sector.

[Sanjay Dutt is the MD & CEO of Tata Realty and Infrastructure Limited]

Keeping key rates unchanged was on expected lines: Anuj Khetan

www.newsbarons.comKeeping in mind the recent surge in the COVID-19 cases and the restrictions imposed, the monetary policy committee’s decision to keep key rates unchanged at 4% was on expected lines. This move is a much-appreciated step recognizing the role of the real estate sector in generating employment and economic activity. The Union Budget 2021-22 also has provided a strong impetus in favour of the real estate sector. With the interest rates at a record low, the Government will continue taking affirmative measures as long as it is necessary to revive the economy and mitigate Covid-19 impact. With stamp duty reversed back to 5% and real estate sales on the upside, it would boost the banks to further transmit interest rate reduction to end-users to provide further more incentive to renters to eventually turn into homeowners.

[Anuj Khetan is the Director at Vijay Khetan Group]

RBI strengthens focus on economic stability amidst rising COVID cases in India: Rajani Sinha

The RBI has taken reassuring steps to infuse additional liquidity into the housing sector through the interventions of increased financing to National Housing Bank and extension of priority sector tag for bank funding to NBFCs for housing loans.

However, given the inflationary concerns in recent months, RBI has maintained the status quo on key policy rates. At a time when rising second wave of COVID infections and subsequent lockdowns are derailing economic momentum, RBI interventions will help maintain adequate liquidity as well as prevent hardening of yields in bond market. These measures will ensure economic stability as well as keep real estate sector stay afloat during such precarious times. Hopefully, benign retail inflation on account of better monsoon and easing of crude oil prices, coupled with accommodative stance would translate into lowering of policy rate in near future.

[Rajani Sinha is the Chief Economist & National Director at Research, Knight Frank India.]

We hope that lenders take a cue from the RBI move to leave rates unchanged: Dhruv Agarwala

www.newsbarons.comThe RBI move to hold key rates unchanged, including holding the repo rate at 4%, is along expected lines, amid a sharp increase in COVID-19 cases in India that has forced many states to announce partial curfews and lockdowns. Even though public lender SBI recently announced a hike in its home loan rates, triggering expectations that other banks might follow suit, we hope that lenders in India would take a cue from the RBI move to leave rates unchanged and continue to offer homebuyers the benefit of a historically low interest rate regime. This is the first review of the monetary policy in the new fiscal year and it is likely that RBI will carefully monitor how the COVID-19 situation evolves and change its stance later in the financial year as the need arises.

[Dhruv Agarwala is the Group CEO of, and]

Residential real estate will continue to attract investment: Ram Raheja

www.newsbarons.comRBI expectedly kept the key rates unchanged and reiterated its accommodative stance on rates to achieve sustainable growth of the economy and its determination for control over inflation. This will continue to further foster the demand for housing. Housing markets have responded well in the past to lower home loan rates, stamp duty reduction and other rebates. With inflation set to be high and economic recovery slow due to surge of COVID, residential real estate will continue to attract investment as it is a safe-haven asset.

[Ram Raheja is the Director at S Raheja Realty]

Real estate industry’s perennial hope is fixed on lower interest rates: Ramani Sastri

www.newsbarons.comWith the role of the real estate sector in generating employment and economic activity, one would usually expect RBI to cut repo rates in order to boost consumption. It also goes without saying that the real estate industry’s perennial hope is fixed on lower interest rates. Any further reduction of the repo rate would have aided in ensuring adequate flow of capital in the market. However, home loan interest rates have already gone down substantially over the last year, and are presently at an all-time low. Homebuyers will continue to take advantage of the lowest ever home loan interest rates and with the emerging need, the demand for housing is going to sustain and many fence-sitters will take the plunge and make the purchase. With improved GDP growth estimated in the near future, we expect that the real estate sector will contribute a substantial share to overall economic development.

[Ramani Sastri is the Chairman & MD of Sterling Developers.]

A further cut in the key rates would have given a boost to current demand uptick: Lincoln Bennet Rodrigues

Budget 2020 newsWhile the real estate industry always aspires for reduced interest rates, the decision of RBI to keep the repo rate unchanged is understandable at this juncture and will make sure that home loans will continue to remain at attractive rates and this should augur well for home buying sentiment. Residential demand is reviving in the pandemic context and this needs to be fostered. A further cut in the key rates would have given a boost to current demand uptick that we have seen recently. Our country is recovering fast from the Covid-induced slowdown due to revival in domestic consumption – which has greatly benefitted from the benign interest rate regime, infusion of liquidity as well as stable returns of real estate investment compared to other investment instruments. The International Monetary Fund (IMF) has projected an impressive 12.5 per cent growth rate for India in 2021, stronger than that of China which augers well for real estate sector too. As the economy is gradually opening up and getting back on track to restore the lost momentum, we feel that special attention should be paid to the real estate sector which contributes significantly to the country’s economic growth.

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

More reforms are required to propel the growth of real estate sector: Riaz Maniyar

The decision by RBI to maintain the repo rate status quo will make sure that cost of borrowing will not harden soon. However, a further cut in the key rates would have given a boost to current demand uptick for real estate. The low-interest rates have started impacting the property markets in a positive way as maintaining low finance costs is critical for a sustainable recovery in the real estate sector and enhancing confidence in home buyers. A wave of spending by the government across sectors has also set the stage for years of high growth of the economy which will in-turn influence real estate too. While the government has taken some initiatives to uplift the sector in the past few months by introducing stress funds and stimulus packages, more reforms are required to propel the growth of real estate sector.

[Riaz Maniyar is the Co-founder of YieldAsset Real Estate Tech]