Repo Rate Cut Boosts Real Estate Sector, Especially in Kolkata
Sushil Mohta, president of CREDAI West Bengal and chairman of Merlin Group, welcomes the RBI's decision to cut the repo rate by 50 basis points to 5.5%. This move is expected to significantly benefit the real estate sector, particularly in Kolkata, which is an affordable housing market.
Repo RateReal EstateAffordable HousingRbiKolkataReal Estate NewsJun 06, 2025
According to Mohta, Kolkata stands to benefit significantly from this decision, as it is predominantly an affordable housing market. Lower home loan rates will make housing more accessible to a larger section of the population, thereby boosting buyer sentiment.
For developers, reduced borrowing costs will ease financial pressure, especially for ongoing and affordable housing projects. The Cash Reserve Ratio (CRR) cut will further enhance liquidity in the system, making it easier for both homebuyers and builders to access funds. This increased liquidity will help in reducing the cost of construction and development, making projects more viable and attractive.
Mohta emphasized that the RBI's decision reinforces confidence in the resilience of the Indian economy and will give a much-needed push to Kolkata’s real estate market. “This move will not only benefit existing projects but also stimulate new investments in the sector, leading to a more robust and dynamic real estate market in Kolkata,” he added.
The real estate sector has been facing several challenges, including high interest rates, liquidity constraints, and a slowdown in demand. The repo rate cut is expected to address some of these issues and provide a much-needed stimulus to the market. With lower home loan rates, potential buyers are more likely to enter the market, leading to increased sales and a boost in the overall economic activity in the city.
CREDAI, the Confederation of Real Estate Developers' Associations of India, represents the interests of real estate developers across the country. The organization has been advocating for measures to support the real estate sector and improve its performance. The recent repo rate cut is seen as a positive step in this direction, and CREDAI West Bengal is hopeful that it will lead to a revival of the real estate market in Kolkata and other parts of the country.
In conclusion, the RBI's decision to cut the repo rate is a welcome move that is expected to have a significant positive impact on the real estate sector, particularly in Kolkata. It will make housing more affordable, ease financial pressure on developers, and boost overall market sentiment. This is a crucial step towards revitalizing the real estate market and supporting the broader economic growth of the region.
Frequently Asked Questions
What is the repo rate?
The repo rate is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks. It is a key tool used by the RBI to control the supply of money in the economy.
How does a repo rate cut benefit the real estate sector?
A repo rate cut reduces the cost of borrowing for both homebuyers and developers. This makes home loans more affordable and reduces financial pressure on developers, leading to increased demand and activity in the real estate market.
Why is Kolkata's real estate market considered an affordable housing market?
Kolkata's real estate market is considered an affordable housing market because it has a significant number of properties that are priced within the reach of middle-income and lower-middle-income groups. This makes it easier for a larger section of the population to afford homes.
What is the Cash Reserve Ratio (CRR)?
The Cash Reserve Ratio (CRR) is the percentage of total deposits that commercial banks are required to keep with the Reserve Bank of India. A cut in the CRR increases the liquidity in the banking system, making it easier for banks to lend money.
How does increased liquidity benefit the real estate sector?
Increased liquidity in the banking system means that banks have more funds available to lend. This makes it easier for homebuyers to get loans and for developers to access funds for ongoing and new projects, thereby boosting the real estate market.
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