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Talk of a possible 25-bps repo rate cut sparked mixed reactions across the real estate and investment community. Ankur Jalan, CEO of Golden Growth Fund, said depositors may worry about lower returns as banks reduce deposit rates, pushing many wealthy investors toward higher-yield options such as real estate-focused AIFs. He added that cheaper capital would also help developers and expand opportunities for such funds. Developer Lalit Parihar noted that easing inflation and stronger consumer spending support another rate cut, which could make home loans more affordable. Broker Vijay Harsh Jha pointed to slowing housing volumes and said lower lending rates could draw cautious buyers back into the market.
The prospect of a 25-bps reduction in the repo rate - widely discussed earlier this week - generated mixed reactions across the real estate and investment ecosystem. Executives indicated that while the broader economy stood to gain from a softer interest-rate environment, depositors and homebuyers were likely to reassess their financial strategies in response to shifting market conditions. Advertisement
Mr Ankur Jalan, CEO of Golden Growth Fund (GGF), a Category II real estate-focused Alternative Investment Fund (AIF), noted that depositors could view a rate cut with concern, particularly as it would erode returns on fixed deposits and other interest-bearing savings. He indicated that banks were likely to reduce deposit rates in the coming months, making it increasingly difficult for savers to secure meaningful yields. He added that affluent investors and family offices typically redirect capital into higher-return vehicles such as real estate-oriented Category II AIFs to preserve real yields, which tends to improve the fundraising momentum for such funds during low-rate phases.
Mr Jalan further stated that a lower interest-rate environment reduces developers' cost of capital and enhances project viability, thereby expanding opportunity areas for AIFs. This pattern has been observed historically during earlier easing cycles when developers accelerated launches and refinancing activity as borrowing became more competitive.
Offering a developer's perspective, Mr Lalit Parihar, managing director of Aaiji Group, a Dholera-based real estate firm, said that several macroeconomic factors had shifted in favour of a rate cut since June. He observed that CPI inflation had fallen comfortably below the Reserve Bank of India's threshold and that recent GST rationalisation had strengthened consumer spending. He commented that another 25-bps rate reduction in the current Monetary Policy Committee discussions would further reinforce India's growth path. Drawing from the liquidity support initiatives announced by the RBI earlier this year and the cumulative 100-bps reduction in repo rate between February and June, he said it was now important to make borrowing more accessible and affordable for homebuyers.
On the demand side, Mr Vijay Harsh Jha, founder and CEO of property brokerage firm VS Realtors, highlighted a slowdown in housing volumes despite a rise in overall sales values. He attributed this disconnect partly to sharp increase in prices, which he suggested could edge genuine homebuyers out of the market over time. He remarked that a 25-bps cut in lending rates would encourage hesitant buyers to re-enter the market, particularly as developers had indicated a pipeline of more affordable inventory in the upcoming quarters.
Together, the views reflected a sector weighing the implications of monetary easing - balancing the benefits of cheaper capital against concerns over consumer sentiment and homebuyer accessibility.
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