Monetary Policy February 2021: Real Estate Outlook

Monetary Policy

Industry leaders share their outlook on the Monetary Policy, with rates unchanged, justifying the MPC move but expressed a rate cut would have helped to combat the pandemic driven crisis across sectors.

Team NewsBarons reports.

A rate cut would have been better to combat the negativity of pandemic led economic crisis: Dr. Niranjan Hiranandani

Monetary Policy February 2021Under the given market scenario and circumstance, the RBI’s direction on unchanged repo rate is very much on the anticipated lines, though a rate cut would have been better to combat the negativity of pandemic led economic crisis across the industry. As the economy is gradually opening up and getting back on track to restore the lost momentum, the regulator has indeed brought innovative liquidity injection measures to maintain the policy stability and ensured that additional liquidity is provisional. It is extremely important for the regulator to balance its borrowings from the market so that it doesn’t jeopardize the financial stability and disrupts other market players.

The new policy’s paramount objective of economic revival were addressed by announcing an innovative measures like enhancing liquidity by allowing NBFC to tap TLTRO on tap scheme, allowing additional credit for small MSME borrower’s up to INR 25 lakhs, exemption to FPI investment in defaulted corporate bonds to boost further investment in recaptured economic revival and firming up consumer protection. The observation that sales and new launches of residential units in major metropolitan cities reflect a renewed confidence in the real estate sector’ reinforces the need for further positive booster dose to strengthen its core revival that enacts a multiplier effect on 270 allied industries.

[Dr. Niranjan Hiranandani is the National President of NAREDCO and MD of Hiranandani Group.]

RBI’s current stance is absolutely justified: Anuj Puri

Anarock Monetary Policy February 2021As expected, the repo rate and the reverse repo rates remained unchanged while maintaining an accommodative stance. With consumer inflation still trending at the upper end of the apex bank’s band, and the policy repo rate also being substantially reduced by 115 basis points since February 2020, RBI kept the rates on hold, with an eye on how the inflation and the economic recovery pans out in the coming months. Advance estimates indicate that the Indian economy may contract as much as 7.7% in FY2020-21 due to the pandemic.

In such a scenario, one would usually expect RBI to cut repo rates in order to boost consumption. Certainly, the real estate industry always aspires for reduced interest rates. Housing demand is reviving, and this demand needs to be fostered. However, the RBI’s current stance is absolutely justified, given the unique circumstances. We are certain that rates will be adjusted favourably once the pandemic exigencies ease.

[Anuj Puri is the Chairman of ANAROCK Property Consultants.]

Measures on enhanced bank funding window for NBFCs will benefit the stressed sectors: Shishir Baijal

www.newsbarons.comThe decision to maintain the REPO and reverse REPO rate by the RBI is in line with expectations. While the recent moderation in headline inflation rate has lent comfort, RBI will be cautious of demand side inflation picking up as economic growth momentum picks up. Measures on enhanced bank funding window for NBFCs will also benefit the stressed sectors including real estate.

With a growth focussed budget recently presented by the finance minister, that further supports the government’s aim of nurturing the economy, this status quo will further allow demand creation including for high involvement products like real estate. As most global agencies have touted, India is expected to recover faster from the COVID induced slowdown mostly based on the restoration of the domestic consumption – which has greatly benefitted from the benign interest rate regime and infusion of liquidity.

As seen in the past few months, housing markets in the country have responded well to low home loan interest rate. Given the interlinkages of the housing market with other sectors of the economy, we believe that low interest rate for a sufficiently long period of time will help build a strong and broad-based demand momentum in the Indian real estate market.

[Shishir Baijal is Chairman & Managing Director of Knight Frank India.]

RBI should ensure that previously announced rate cuts are transmitted to end users: Ramesh Nair

Monetary Policy February 2021The expectation from the real estate industry was deeper cuts in policy rates.
Given that RBI has not cut rates, they should now try and ensure that the previously announced rate cuts are fully transmitted to end-users and developers and also focus on increasing the quantum of overall credit available for the real estate sector.

[Ramesh Nair is a Real Estate industry veteran and former CEO of JLL India.]

RBI’s decision signals the government’s focus on fuelling consumption: Surendra Hiranandani

RBI's decision signals the government’s focus on fuelling consumption: Surendra Hiranandani   RBI's decision to keep policy rates unchanged is welcome and signals the government’s focus on fuelling consumption. Given that the economy is well on its path to recovery and the Government’s continuous efforts to promote ease of doing business, digitization, focus on infrastructural development and capital expenditure will help the real estate sector business going forward. With regards to the real estate sector, the government has continued on its stated path of supporting sector specific sops and in light of this, we are optimistic that the government would initiate steps soon to address the immediate liquidity issues and changes in the GST regime amongst others. The entire focus would now be on how the government plans to boost demand and a lot needs to be done for the sector to improve the pace of growth.  Surendra Hiranandani is the Chairman and Managing Director of House of Hiranandani.   Government should consider allowing FDI in ready to move in inventory to improve liquidity in the market: Sanjay Dutt   We welcome the apex bank’s decision to keep the repo rate and reverse repo unchanged at 4% and 3.35% respectively, for the fourth time in a row. Maintaining this accommodative outlook is extremely crucial, especially with the green shoots of recovery being visible now. The government has tried to uplift the sector in the past few months by introducing stress funds and stimulus packages that have provided some relief to the sector. We had great expectations from the Union Budget 2021 but it did not address a lot of the issues beyond affordable housing and REITS. We urge the government to consider the multiplier impact of the sector and introduce reforms that propel the growth of the sector, such as allowing FDI in ready to move in inventory to improve liquidity in the market. Granting of industry status, extending the tax benefit from affordable to mid housing, allocating additional capital for distressed funds are some of the other recommendations that are bound to benefit the homebuyers and developers. We appreciate the government’s agile response to boost recovery in the pandemic-stricken period and are truly thankful for their continued support.   Sanjay Dutt is the MD & CEO of Tata Realty and Infrastructure Limited.RBI’s decision to keep policy rates unchanged is welcome and signals the government’s focus on fuelling consumption. Given that the economy is well on its path to recovery and the Government’s continuous efforts to promote ease of doing business, digitization, focus on infrastructural development and capital expenditure will help the real estate sector business going forward. With regards to the real estate sector, the government has continued on its stated path of supporting sector specific sops and in light of this, we are optimistic that the government would initiate steps soon to address the immediate liquidity issues and changes in the GST regime amongst others. The entire focus would now be on how the government plans to boost demand and a lot needs to be done for the sector to improve the pace of growth.

[Surendra Hiranandani is the Chairman and Managing Director of House of Hiranandani.]

Government should consider allowing FDI in ready to move in inventory to improve liquidity in the market: Sanjay Dutt

Monetary Policy February 2021We welcome the apex bank’s decision to keep the repo rate and reverse repo unchanged at 4% and 3.35% respectively, for the fourth time in a row. Maintaining this accommodative outlook is extremely crucial, especially with the green shoots of recovery being visible now. The government has tried to uplift the sector in the past few months by introducing stress funds and stimulus packages that have provided some relief to the sector. We had great expectations from the Union Budget 2021 but it did not address a lot of the issues beyond affordable housing and REITS. We urge the government to consider the multiplier impact of the sector and introduce reforms that propel the growth of the sector, such as allowing FDI in ready to move in inventory to improve liquidity in the market. Granting of industry status, extending the tax benefit from affordable to mid housing, allocating additional capital for distressed funds are some of the other recommendations that are bound to benefit the homebuyers and developers. We appreciate the government’s agile response to boost recovery in the pandemic-stricken period and are truly thankful for their continued support.

[Sanjay Dutt is the MD & CEO of Tata Realty and Infrastructure Limited.]

A further cut in the key rates would have given a boost to current demand uptick: Dhruv Agarwala

Monetary Policy February 2021The decision of RBI to keep the Repo Rate unchanged along with accommodative stance is understandable at this juncture, although a further cut in the key rates would have given a boost to current demand uptick that we have seen recently. The measures announced by the RBI Governor today for liquidity enhancement in the economy is indeed a good step and was much required. Real estate has been badly hit during the pandemic and the recent Budget announcements and the RBI’s decision today will help the sector to cope up with markets’ uncertainties better in the near future.”

[Dhruv Agarwala is the Group CEO of Housing.com, Makaan.com and Proptiger.com.]

Maintaining low home loan rates was critical for a sustainable recovery: Piyush Bothra

The RBI’s India’s decision to maintain the repo rate status quo is a positive decision and will make sure that home loan interest rates will not harden soon in the coming days. The low-interest rates have started impacting the property markets in a positive way. Maintaining low home loan rates was critical for a sustainable recovery in the real estate sector. After the announcement of tax holiday for the primary affordable and rental housing segments in the recent budget, this news will enhance confidence in homebuyers and nudge them towards making good purchase decisions.

[Piyush Bothra is the CFO of Square Yards.]

The home loan rates will continue to be at a multi-year low: Ram Raheja

In line with expectations, the RBI has kept the repo rate unchanged at 4%, while continuing the basic accommodative stance of the policy in response to the objective of revival of growth. It’s a wise step taken to ensure 2021 to be a better year and to be a setting tone for the new economic era. The home loan rates will continue to be at a multi-year low, hence aiding homebuyers. The MSF and bank rates are unchanged at 4.25% and this will help in restructuring many companies which are still in distress due to the lockdown and boosting the sector at large.

[Ram Raheja is Director at S Raheja Realty.]

RBI’s announcement on LRS will help boost remittance: Krish Raveshia

As expected the MPC has kept rates unchanged for the fourth consecutive time after it cut rates in May 2020 and unleashed liquidity in the system to help growth. The accommodative policy stance is also unchanged to act on rates going forward if the need arises. RBI Governor projecting GDP growth over 10% for next year and easing CPI inflation is a big positive.

RBI’s resolve to keep easy system liquidity and low interest is key to the recovery of the real estate industry and the overall economy. The real estate sector is showing signs of recovery and needs government hand-holding. RBI’s announcement on LRS will help boost remittance, NRIs have been huge investors in Indian real estate

[Krish Raveshia is the CEO at Azlo Realty.]