New Delhi: As the Reserve Bank of India (RBI) reduced the key interest rates by 25 basis points on Tuesday, real estate developers expect that the rate cut, in combination with the upcoming festive season, would revive demand in the sector saddled with sluggish sales.
“With the rate cut at this festive season, the sluggishness in the real estate sector would come to an end and as a result of the implementation of the new Real Estate Regulatory Act coupled with the rate cut; more new projects would come up,” said R. K. Arora, chairman of Nodia-based developer Supertech Ltd.
Several real estate developers have unveiled various offers to attract buyers during the upcoming festive season and expect the rate cut to add to the demand.
Supertech had launched special offer for the festive season under which the buyers will get a gift card of Amazon upto Rs.2 lakh, free club membership, and free car parking on every purchase of flat in various projects at Noida, Greater Noida, and Gurgaon.
Online real estate portal Magicbricks.com has also lauched its Dream Home Festival, which will feature more than 400 projects and showcase properties on discounts and offers with attractive prices.
The developers are hoping that the banks will pass on the rate cut to home buyers by reducing the rates of home loans, which account for a major portion of property financing.
“We now earnestly hope that the banks will quickly pass the benefit of this repo rate cut to their customers by bringing down their lending rates, given the easy liquidity conditions and the recent downward adjustment in small saving rates. A cut in home loan rates will surely help buyers firm up their decision to buy a house in this festival season and give fillip to sales,” said Rajeev Talwar, chief executive officer of DLF Ltd.
“If commercial banks quickly pass on the benefits of the rate cut to loan seekers, we can expect a ‘real’ festive season for all stakeholders in the real estate sector as more buyers may actually decide to get off the fence and invest as most developers are already rolling out ‘festive offers’ to attract them,” added Anshul Jain, managing director, India of property consultant Cushman & Wakefield.
However, not everyone is looking the rate cut on a positive note and are cautious about the possibility of banks passing on the rate cut benefit to the consumers and whether lower rates can make home buyers step back into the real estate market.
“Unless RERA and other pro-consumer policies come into play, buyers will continue to be wary. Therefore, we can expect only a marginal improvement in sentiment on the back of this rate cut. At this point, there is also no ready answer to the question of to what extent banks will actually pass on the benefit of the rate cut to borrowers,” said Anuj Puri, chairman & country head of real estate consultancy Jones Lang LaSalle India.