MUMBAI, 22 DECEMBER, 2015: As we come to the end of 2015, real estate in Mumbai and the MMR as also across Maharashtra has been looking at rising sales and positive sentiments from buyers. What does 2016 hold in store for real estate? “Logically speaking, trends suggest that 2016 will definitely see better days ahead for real estate,” said Niranjan Hiranandani, Managing Director, Hiranandani Communities and Founder – President, National Real Estate Development Council (NAREDCO – Maharashtra).
Among the factors that helped create the positive scenario in 2015 has been the Reserve Bank of India (RBI)’s rate cuts during the monetary policy reviews across the year, said Niranjan Hiranandani. For some, it was a surprise that the RBI Governor Raghuram Rajan maintained ‘status quo’ during the Fifth bimonthly monetary policy review, 2015-16 on 01 December, 2015. The multiple rate cuts initiated by the RBI through the year have provided some relief to the economy and the real estate sector, and so there was an expectation that he would end the year with another rate cut, said Niranjan Hiranandani. “Why this did not happen is simple: it is taking some more time for the ‘rate cut’ announcements by the RBI to reflect at the ‘ground level’. The impact of rate cuts over the year have resulted in stability and improvement in market sentiments in real estate, but the RBI Governor expects banks to do more, and pass on the entire rate cut to home buyers. This happening, in the New Year, the expectation is that the RBI will continue to monitor the situation and make necessary adjustments which will boost the economy,” he added.
With the RBI being aware that less than half the 125 bps rate reduction this year has been passed onto customers by banks, the RBI Governor has been mentioning the need for banks to ‘do the needful’, and the RBI remains in a ‘wait and watch’ mode – which is why the last monetary policy review in 2015 did not witness any rate cuts. “Another perspective is that RBI Governor, might not have wished to dampen the euphoria of substantial rate cut with a symbolic cut in the last month of 2015. So, any further rate cuts will happen after the RBI Governor sees banks passing on benefits to home loan takers,” added Niranjan Hiranandani.
Market trends suggest that a major interest rate cut with potential to increase sales of residential real estate may be on the cards in 2016. This will definitely have the potential to boost off-take of residential real estate in 2016, said Niranjan Hiranandani. “If this does happen, 2016 may witness the sort of rate cut which would result in real change, effectively lowering the EMI burden of homebuyers. The RBI Governor has already put subtle pressure on the banks to pass the benefits of previous rate cut onto homebuyers, and this happening, things will be set for a ‘major rate cut’ in 2016 – which will make it truly, a ‘Happy New Year’,” he concluded.