A relaxation in lending rate would have been a morale booster: Realty players

The first monetary policy post the Union Budget has dampened the enthusiam of the real estate sector which called disappointing for the sector. Industry analysts note that a relaxation in lending rate would have been a morale booster

The Reserve Bank of India (RBI) kept its key interest rate unchanged at 6 per cent for the fourth time in succession at its final bi-monthly monetary policy review of the fiscal, citing concerns about the inflationary push by rising global crude oil prices.

“RBI has kept its key interest rate unchanged at 6 per cent for the fourth time in succession at its final bi-monthly monetary policy review of the fiscal. From a real estate perspective, I would focus on the RBI taking note of the rather slow transmission mechanism of rate actions by banks to to the customers, which is reflected in the mention about linking the base rate with the MCLR. This should help in terms of transmission of rate cuts to the customer, making the process more efficient”, said Niranjan Hiranandani, CMD, Hiranandani Communities and President NAREDCO.

Ramesh Nair, CEO and Country Head, JLL India said, “There was some hope that the RBI may relax lending rates that would prove beneficial in pushing sales for residential projects. After a lackluster Union Budget, a marginal relaxation in lending rates would have been a good morale booster.

Shishir Baijal, CMD, Knight Frank India notes, “The decision has come as a relief for the real estate sector since an increase in the policy rate would trigger an adverse impact on the industry which is already grappling with slowdown for the last 3-4 years”

“Clearly, inflation continues to remain a concern for the RBI. The absence of a rate cut does not do much for the real estate sector though we don’t see this impacting demand. Demand for affordable homes is strong and the momentum is expected to continue, Sunil Aggarwal, Associate Dean and Director, RICS SBE.

Dhiraj Jain, Director, Mahagun Group says, “The decision of the RBI to not reduce the rates until it has been fully convinced about the inflation control is very justified. Since we are closing down on the financial year, a rate cut today would have allowed potential buyers to plan better for their investments in the property market for the next financial year.”

Samir Jasuja, MD & Founder, PropEquity, says, “On one hand, the government had been pushing the RBI to reduce lending rates. On the other hand, RBI has decided to maintain the current level, indicating cautiousness due to the rising rate of inflation. A rate cut would have had a positive impact on real estate since home loans would then have become even cheaper. However, certain other global factors, beyond the purview of real estate, are at play which have caused the RBI to keep rates put.”

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