RBI Monetary Policy February – Reaction from Real Estate Industry Leaders

Keval Valambhia COO CREDAI MCHI

Ensuring stability in interest rates holds profound implications for both the residential and commercial real estate domains. Keeping the Repo rates low will foster an environment of financial accessibility through consistently low borrowing costs. Stable interest rates serve as a pivotal catalyst for driving heightened interest and investment in properties across both sectors. This, in effect, generates a ripple effect of increased demand, thereby injecting vitality into the real estate industry and also to economy at large. Amidst the intricacies of economic fluctuations and market uncertainties, the imperative of prioritizing affordable housing cannot be overstated.”

Sachin Marani, Director – Square Feet Group, Secretary – CREDAI MCHI – Thane

“We are pleased that the RBI has decided to maintain the REPO rates unchanged, considering that inflation remains above the 4 per cent target. The market had anticipated that the RBI would maintain the status quo on its policy stance in this monetary policy. The current GDP projection for FY24 is 7.0%, indicating a robust Indian economy. The repo rate has been held at 6.5% for five consecutive meetings, and there is speculation that policy rate cuts may commence from June or August onwards.

The interim budget focused on maintaining fiscal discipline with no major new spending announcements, suggesting less pressure on the RBI to hike rates to control inflation. This decision will be a relief for homebuyers, especially in the affordable segment where the market is getting stabilized after a period of instability. There is a growing demand for real estate amongst millennials especially in emerging markets like Thane, Navi Mumbai, and Panvel where the real estate prices are still rational and reachable.

The millennials are looking more than carpet and structure, they want a lifestyle, facilities, plug-and-play solutions in housing and they want to buy properties from reputable developers. The only thing that is stopping or perhaps delaying their home buying decisions is the anticipation that interest rates will come down in the next few months. As a developer, we are also optimistic that the RBI will consider reducing the REPO rates in the upcoming monetary policy, which will greatly relieve homebuyers and particularly bring more young home buyers into the real estate fold.

Vihang Sarnaik, Director, Vihang Group

We’re pleased with the RBI’s decision to maintain the status quo on REPO, especially given the ongoing inflation above the 4 per cent target. It aligns with market expectations, indicating a sense of stability in the current monetary policy. As a leading developer catering the middle-class housing aspirations, this will keep the housing demand intact.

The decision to keep the repo rate intact will help developers like us who catering the middle-class aspiration of owning a home. It will help to continue the current momentum in real estate sales as even a 0.25 BPS increase would have impacted the home-buying sentiments in this segment.

We have anticipated that there won’t be a major change in the repo rates so we have secured a monumental approval for a staggering 3 million square feet commencement certificate from TMC to deliver quality housing in the price bracket of Rs60 to Rs 90 Lakhs to cater to this aspirational middle class.

Looking ahead, we’re optimistic that the RBI will consider reducing the REPO rates in the upcoming monetary policy, providing much-needed relief to the working and salaried class in owning a home.

Nikunj Sanghavi, Managing Director – Veena Developers, Treasurer – CREDAI MCHI

“The decision to uphold the current repo rate is a welcome move in the face of a challenging economic environment world wide, showcasing a judicious approach to balancing diverse sectoral needs, including real estate. Recognizing the intricate dynamics in transmitting repo rate adjustments to lending rates, this decision provides a glimmer of positivity that holds the potential to invigorate buyer sentiments. Nevertheless, as an industry, we maintain vigilance, considering the cumulative impact of recent rate hikes on demand, especially in the affordable and middle-income segments. Emphasizing the broader economic interest and the housing industry’s well-being, we advocate for a future reduction in the repo rate by the RBI.