RBI's Anticipated Rate Cut In December To Boost Real Estate Demand, Says Puravankara CEO

If the Reserve Bank of India cuts interest rate in December, as indicated in its latest monetary policy review on Wednesday, it will positively impact the real estate sector by boosting demand, according to Abhishek Kapoor, group chief executive officer of Puravankara Ltd.

Speaking to NDTV Profit, he attributed most of the demand to a rising economy. “The RBI rate cut cycle will have a positive impact on us. The current rates have had no impact on demand. A reduction will have a positive impact on demand as well as the industry,” he said.

In its latest monetary policy review on Wednesday, RBI has kept the benchmark repo rate unchanged at 6.5% for the tenth time in a row. The central bank changed its monetary policy stance to "neutral" from the "withdrawal of accommodation" earlier. This could be an indication of a possible rate cut in the next policy review that is due in December.

The top executive believes that an RBI rate cut would primarily simplify decision-making for consumers, especially in big ticket purchases like residential properties.

“This is because the interest cost is directly linked to the affordability of how much loan can be given to the buyer. In that sense it will be helpful,” he pointed out.

Banks usually lower their interest rates on home loans and other loans whenever the RBI cuts its lending rates and vice versa.

“So, overall a rate cut is positive, but the demand is really economy-driven because in the past we have seen that even with increasing interest rates there has been no impact on demand,” Kapoor added.

He believes that RBI's dovish commentary is unlikely to impact demand in the market. “There will be no meaningful impact (of the RBI dovish commentary). We will see growth in sales as we have seen earlier.”

Talking about projections for the year, the Puravankara group CEO highlighted that the company is confident of better momentum in the second half of the year, riding on the back of new launches. The company is aiming to launch projects of over 12 million square feet in the financial year 2024–25.

“Most of those projects are coming into the market in the third and fourth quarters, with Q4 possibly being the largest. In the first quarter itself we sold about 1.2 million sqft, resulting in Rs 1,128 crore of sales,” Kapoor said.

Shares of Puravankara on Wednesday hit the 5% upper circuit limit at Rs 394.3 apiece on the NSE. In comparison, the benchmark index Nifty 50 closed 31.2 points, or 0.12%, lower at 24,981.95.