Real Estate Sector Anticipates Relief as RBI Monetary Policy Looms
Industry experts from Bengaluru-based Sanjeevini Group and Gurugram-based InfraMantra discuss the potential impact of RBI's monetary policy on home loan interest rates and real estate investments.
Real EstateRbiInterest RatesHome LoansInvestmentReal EstateMay 30, 2025
Home loan interest rates have dropped below 8% in some banks, which is a positive sign of the timely transmission of two repo rate cuts by the RBI. We anticipate another 25bps cut in the repo rate and hope that more banks will quickly pass on the benefit to borrowers. This reduction will provide much-needed relief to existing homebuyers in the form of reduced EMIs and will also encourage those who have been postponing their decision to buy a home. Real estate sales have been steady, and a decline in interest rates will benefit developers by reducing financing expenses, thereby improving project viability and making working capital cheaper.
Mr. Garviti, Director & Co-Founder of InfraMantra, a Gurugram-based property consulting firm, also weighs in on the situation. The RBI has initiated two interest rate cuts in 2025. With record-low inflation and stable economic growth, another 25-bps cut is imminent as the apex bank looks to stimulate growth by making lending more affordable for businesses and consumers. The three consecutive quarters of sub-1 lakh unit launches in the top 9 cities and a 19% decline in sales in Q1 indicate some caution on the part of both developers and homebuyers. A cut in interest rates will boost housing demand and encourage new entrants to make real estate purchases.
Mr. Ankur Jalan, CEO of Golden Growth Fund (GGF), a category II Real Estate-focused Alternative Investment Fund (AIF), provides a different perspective. Interest on fixed deposits by banks has seen a continuous decline with the RBI's cut in the repo rate, thereby disincentivizing depositors. Investors have been moving away from the stock market and traditional real estate investments due to rising volatility and property prices. In such a scenario, those looking to earn good returns and have real estate in their portfolio can consider alternative investments like AIFs, which are regulated by SEBI. These funds offer diversification across properties and geographies, are professionally managed, require relatively smaller investments, and come with tax advantages.
Overall, the real estate sector is poised to benefit from the anticipated monetary policy changes, which could lead to increased demand and improved project viability for developers. For investors, alternative investment options like AIFs present a viable and potentially lucrative opportunity in the current economic landscape.
Frequently Asked Questions
What is the current status of home loan interest rates?
Home loan interest rates have dropped below 8% in some banks, reflecting the impact of two repo rate cuts by the RBI.
What is the expected impact of another 25bps cut in the repo rate?
Another 25bps cut in the repo rate is expected to provide relief to existing homebuyers and encourage new home purchases, while also benefiting developers by reducing financing expenses.
How are real estate sales and launches performing in the top 9 cities?
There have been three consecutive quarters of sub-1 lakh unit launches in the top 9 cities, and sales have declined by 19% in Q1, indicating some caution in the market.
What are the benefits of investing in AIFs for real estate?
AIFs offer diversification across properties and geographies, professional management, relatively smaller investment requirements, and tax advantages.
What is the role of the RBI in influencing the real estate market?
The RBI influences the real estate market through its monetary policy, particularly by adjusting the repo rate, which affects home loan interest rates and overall lending costs.
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