How RBI policy delivers a double bonanza to real estate

Shares of real estate companies are trading with gains of as much as 6% on Friday, June 6, after the Reserve Bank of India (RBI) announced a 50 basis points cut in its benchmark repo rate. This marks the third consecutive rate cut by the central bank, following reductions in February and April.

The Nifty Realty index is trading higher by 4% today, extending gains for the second straight session, with all its constituents in the green.

Real estate stocks, such as Hubtown and Ajmera, rose 8% each, while Godrej Properties gained 5.5%, followed by Kolte Patil (4.5%), Arvind Smart (5%), and DLF (4%).

Other gainers include Puravankara (3.5%), Sunteck (4%), Sobha and Aditya Birla Real Estate (2.5% each), Prestige (3%), Oberoi (3%), and Macrotech Developers (Lodha) with a 2% gain.

The rally in real estate stocks gained further momentum after the RBI

slashed its Cash Reserve Ratio (CRR) by 100 basis points. The cut in CRR will release up to ₹2.5 lakh crore liquidity in the system and reduce the cost of funding for banks, RBI Governor Sanjay Malhotra said in his address.

Property consultancy Anarock termed the simultaneous repo and CRR cuts a “double boost” for affordable housing, especially amid ongoing global economic headwinds. The reduction in the repo rate is expected to spur demand in the Indian real estate sector, particularly within the affordable and mid-income segments. It will also lower borrowing costs for developers.

The CRR cut, on the other hand, increases liquidity in the system, which should enhance developers' access to capital, potentially speeding up project completion timelines. Additionally, banks now have greater room to reduce home loan interest rates, which could further uplift buyer sentiment in cost-sensitive housing segments.

However, Anarock also cautioned that the positive domestic momentum could be partly offset by global uncertainties. Trade tensions and tariffs imposed by the Trump administration have increased the cost of imported construction materials, which may affect developer margins. This, in turn, could impact demand in the luxury and commercial property categories.

Global brokerage firm CLSA has identified key beneficiaries such as Sobha, Prestige Estates, Godrej Properties, and Sunteck Realty.

Additionally, real estate investment trusts (REITs) and large rental-focused players like DLF and Phoenix Mills are expected to gain from lower debt servicing costs and potential asset revaluation.

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