Realty sector hails RBI’s decision to keep the repo rate unchanged at 5.15%

Realty sector hails RBI’s decision to keep the repo rate unchanged at 5.15%

Sanjay JogUpdated: Thursday, February 06, 2020, 03:37 PM IST
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Mumbai: The cash strapped real estate sector has hailed the RBI’s decision to keep the repo rate unchanged at 5.15% while maintaining an accommodative stance. Though a rate cut would have been welcomed by the real estate sector as a sentiment-boosting factor, a meagre change in repo rates would have done little to significantly boost consumer sentiments. As such, previous rate cuts did prompt some banks to lower their interest rates in the recent past - but that had no significant impact on residential real estate sales.

Anarock Property Consultants ChairmanAnuj Puri said in a major relief to the real estate sector and further complementing many of the previous initiatives by the government in 2019, RBI has decided to extend the restructuring of project loans by a year. Loans for projects that have been delayed for reasons beyond the control of their promoters have been extended by another one year without downgrading the asset classification. This aligns with the treatment accorded to other project loans for the non-infrastructure sector.

‘’This is a big move and will bring the much-needed relief to the cash-starved real estate sector - and to both developers and the HFCs from the liquidity perspective. It will help ease out the time for maintaining and managing cash flows for cash-strapped developers and help them to completing several stuck projects. That said, it will not address the other main issue prevailing in the real estate sector – that of continuing low demand,’’ said Puri.

FICCI, joint chair, real estate committee Raj Menda said that RBI move will give relief to commercial real estate developers. ‘’It is a much needed relief and positive policy change. Government recognition of delays that are beyond control of promoters will ease liquidity pressure due to repayment of debt,’’ he noted.

Goodwill Developers Group Promoter Hakim Lakdawala said at present defaulting three straight instalments classifies the account as non-performing asset which is a burden, hence getting extra time is a good for the industry. ‘’The RBI’s decision is a big relief for the real estate sector, especially commercial, as the builders will get one more year to concentrate on the completion of these projects and become financially stable,’’ he viewed.

NAREDCO vice president Ashok Mohanani observed that the overall real estate sector will see stability in terms of investment and purchase behavior. With this the infrastructure prices are likely to remain stagnant which will keep the prices stable for real estate sector.

‘’Though the marketers were expecting a cut in the repo rate along with the restructuring in loans after the Union Budget 2020, the unchanged repo rate will have steady growth in the sector at large. Another impetus for homebuyers will be the CRR leeway for existing and incremental loans will help the stimulus package announced. The RBI announced liquidity measures leading to improvement in sentiment and anticipation of increased liquidity in the market,” said Mohanani.

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