NCR realtors expect RBI to act as catalyst to build on Budget initiatives

by Umesh Kumar Marketing Manager

NCR based realtors today asked the Reserve Bank of India (RBI) to act as a catalyst by reducing interest rate this week to provide the much needed impetus to the real estate sector and build upon the initiatives announced in the Union Budget by Finance Minister Piyush Goyal.

The decision of the RBI Governor-headed Monetary Policy Committee (MPC), which has begun its meeting in Mumbai, will be known on Thursday only at 11.45 am. The RBI has left the repo rate (short-term lending rate) unchanged since October 2018 after hiking it by 25 basis points each in August 2018 and June 2018.

The real estate sector has been facing hardship for several years due to variety of reasons, including high interest rate and low demand. The recent liquidity issues in the NBFC sector, post defaults by IL&FS, has further aggravated their problems.

“We expect that the RBI will go for the much needed reduction in the key lending rate (repo) so that real estate sector could start the new financial year (2019-20) with a positive sentiment,” said Vikas Bhasin, CMD, Saya Homes

Realtors admitted that the RBI has provided a helping hand to the real estate sector by not hiking interest rate in the recent past, but demanded more was needed give a boost to prompt buyers.

“Any interest rate hike at this stage could neutralise the benefits announced by the Finance Minister Piyush Goyal in his interim Budget. Hike in interest rate would dissuade first time home buyers,” said Deepak Kapoor, Director, Gulshan Homz & Former President CREDAI Western UP

Goyal in his interim Budget on February 1 had proposed to extend tax sops for affordable home developers, besides removing the tax on notional rent for a second housing unit as well as unsold units.

The Budget also proposes to extend the benefits under Section 80-IBA of the Income Tax Act for one more year–to housing projects approved till March 2020, which will boost supply of affordable housing.

“We hope the issue of Liquidity crunch to be addressed in the policy review. The strengthening of NBFC will ease out the funding thus increasing investments in the commercial segment,” said Nakul Mathur, MD, Avanta Business Centre. Liquidity crisis following spate of defaults by a major NBFC is another major challenge the sector is facing.

“The RBI is taking steps to infuse liquidity in the NBFCs. However, we expect that the central bank will take more steps to strengthen the NBFCS, a major source of funds for the real estate sector,” said Ashok Gupta, CMD, Ajnara India. The developers were also appreciative of the decision of the present RBI Governor Shaktikanta Das to meet industry representatives.

“The Governor should also meet the representatives of our sector so that we can get opportunity to present our views and also the problems being faced by us,” said Dhiraj Jain, Director, Mahagun Group. Experts are divided on whether the central bank would go in for change in monetary stance on February 7.

“The inflation is ruling low. It is an ideal time for the RBI to go in for a rate cut. We demand at least 50 basis points rate cut at this juncture,” said Kamal Taneja, MD, TDI Infracorp

The Delhi-NCR, the biggest property market of the country, is facing a muti-year demand slowdown, resulting into piling up of huge unsold inventories.

“Basis the recent announcements in the Interim Budget 2019, we expect a rate cut in the lending rates. Where the announcements in the budget have all catered to the needs of individuals, any hike in the rates will barr the individuals from any benefits,” said Nipun Gaba, Vice President, Fairwealth Group

As per the estimates of property consultants, there are currently 6-7 lakh of unsold stocks, of which around 2 lakh are in NCR. Defaults by some developers in delivery Of their projects have also affected demand in this region.

Source - https://www.apnnews.com/ncr-realtors-expect-rbi-to-act-as-catalyst-to-build-on-budget-initiatives/