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Realty sector happy with unchanged repo rates, hopes for cuts in 2014

In the current scenario, where Indian real estate market is struggling with low sentiments, Reserve Bank of India’s (RBI) decision to keep the key policy rates unchanged, has surprised the real estate developers and property consultants. The rates had increased in the last two quarters and this somewhat contributed to the sluggishness of the real estate market. However, it seems that the decision to keep the rates unchanged this time, would infuse some positivity in the property market. In a recent decision, RBI kept the repo rate unchanged at 7.75 per cent, reverse repo rate at 6.75 per cent and the cash reserve ratio at 4 per cent.


“I think RBI has acted wisely by keeping the key rates unchanged. Though there was pressure to raise the rates due to the recent rise in Wholesale Price Index (WPI) and inflation. Still, the apex bank has managed to handle it and hold the rates to 7.75 per cent. This will give a positive signal in the market. We are confident that with a decrease in WPI and Consumer price index (CPI), RBI will also cut the key rates and bring it below 7 per cent by the next review. This is indeed a welcome step by RBI and will boost market sentiments,” says Pradeep Jain, chairman, Parsvnath Developers.


CREDAI-NCR President Anil Sharma says the RBI has “sweetly surprised” both the experts and industry players with its bold decision.


"We, at CREDAI-NCR, could not have asked for more given the high retail inflation of more than 11 per cent. The bold move by the RBI has infused positive sentiments in not only real estate sector but also other sectors of economy,” says Sharma, who is also CMD of Amrapali Group.


The consistent efforts of the RBI have already stabilised rupee against dollar, besides providing short term liquidity support to push growth simultaneously, he adds.


“Experts are already expecting inflation to ease following arrival of winter crop in the wake of normal monsoon. Though the real estate developers’ community will have to wait little longer to see interest rates dipping, but given the right intentions of the RBI, we are confident of flawless run of growth thereafter,” Sharma said.


Developers are hopeful that RBI would soon be able to cut the key rates. Abhay Kumar, CMD, Griha Pravesh Buildteck Pvt Ltd says, “I understand that real estate sector is in urgent need of rates cuts, but looking at the current micro and macro economic conditions, RBI’s step is justified. We are confident that if economy evolves, RBI will definitely announce some rate cuts in future.”


With this decision, RBI has certainly given developers and property consultants a real reason to cheer the new year.