Property developers want more
Though the Reserve Bank of India’s (RBI’s) move to cut repo rates by 25 basis points brought cheer to property developers, the bank could have done more to help the sector, they said.
Besides a slowdown, developers are battling issues over the goods and services tax (GST), which has hit the sales of premium apartments and the Real Estate (Regulation and Development) Act or Rera, which is strict on compliance. Sales and new launches have declined as developers have been focusing on complying with Rera.
“While it remains for the MPC to decide, India’s business and industry view the present scenario as ideal for the RBI to have cut rates by a bit more, given that inflation will most likely remain at moderate level,” said Niranjan Hiranandani, chairman and managing director, Hiranandani Communities. While a cut of 50 basis points (bps) would have been welcome, a cut of 25 bps after four straight reviews when rates remained constant, is a welcome step, he added.
In the policy, RBI Governor Urjit Patel said the MPC thought there was an urgent need to reinvigorate private investment, remove infrastructure bottlenecks, and provide a major thrust to the Pradhan Mantri Awas Yojana for the housing needs of all. “This hinges on speedier clearance of projects by the states,” he said.
Rajesh Krishnan, founder and CEO at Brick Eagle, an investor in affordable homes, said a 25-basis point cut may not move the needle for affordable housing sector. “Despite infrastructure status, banks are not lending for affordable housing projects and hence the sector continues to be capitalstarved. We believe this will change only if affordable housing projects are included under priority sector lending,” he said.
Brotin Banerjee, MD and CEO at Tata Housing Development Company, said the rate cut coupled with commensurate benefits for borrowers would impact home loan rates positively and enhance consumer sentiment. “With the market view calling for measures that encourage investment to boost growth numbers, and with the installation of a regulatory regime for the real estate sector, we expect this move to keep the stimulus on for potential homebuyers to invest, and to benefit current borrowers,” Banerjee said.
Vinod Rohira, managing directorcommercial real estate and REIT at K Raheja Corp, said: “With the recent change in reforms and policies, this rate cut comes as a blessing improving buyer sentiments.… We are optimistic the banks will also pass on the benefit to the consumers, which in turn will help propel the growth of the industry.”
Sales and new launches have declined as developers have been focusing on complying with Rera