Dr. Samantak Das, Chief Economist at JLL India, highlighted that this rate cut aligns well with fiscal strategies and could reignite consumption. He stated, “The rate cut – the first in nearly five years – sends a clear message that a cohesive policy framework is in place, prioritizing growth while balancing risks.” He also emphasized that the reduction in capital costs could spark a new wave of demand in the housing market by improving homebuyer sentiment and affordability.

While 2024 was a strong year for real estate, rising prices had started to slow down market momentum, as seen in the drop in Q4 sales. The recent rate cut, along with new budget tax benefits for middle-income buyers, is expected to boost homebuyer confidence and sustain market activity.

Dr. Niranjan Hiranandani, Chairman of NAREDCO, called the repo rate cut a strategic move, citing stable inflation and a moderate fiscal deficit. He remarked, “With inflation under control and steady economic growth, this rate reduction signals resilience and robust demand, despite global uncertainties.”

Shishir Baijal, Chairman and Managing Director of Knight Frank India, also welcomed the move, calling it a significant positive development for real estate. He believes the rate cut will make housing more affordable, increasing demand for home loans and stimulating sector growth. Baijal added that the tax benefits for the middle class would further support residential demand, particularly in the sub-50 Lakh category, which had seen weaker demand recently.

Overall, experts believe the RBI’s repo rate cut, combined with the budget’s focus on tax incentives, will have a long-lasting positive impact on the housing market. With lower interest rates, homebuyers are expected to find ownership more accessible, which could lead to increased sales and new project launches.

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Anshul Jain, Chief Executive for India, SEA & APAC Tenant Representation at Cushman & Wakefield, called the rate cut “well-timed and much-needed.” He explained that the decision comes at a crucial time, as CPI inflation has eased and Q2-FY25 GDP growth has slowed. Jain added that the rate cut would help boost consumption and lower borrowing costs for the housing sector, especially in the affordable and mid-income home segments. He also highlighted the positive impact of the Union Budget measures in tandem with the RBI policy, offering much-needed support for the residential market.

Praveen Khandelwal, Delhi Chandni Chowk MP and Secretary General of the Confederation of All India Traders (CAIT), also welcomed the RBI’s move, calling it a “pro-growth” decision. According to Khandelwal, the rate cut will lower borrowing costs for both businesses and consumers, driving up disposable incomes and enhancing consumer spending. He emphasized that increased liquidity will encourage investment, further propelling economic growth. Khandelwal also pointed out that if the income tax exemption limit is increased to Rs12 lakh in the upcoming budget, it would lead to higher savings, thereby boosting consumer demand and market liquidity.

Ashwani Rana, Founder of Voice of Banking, echoed these positive sentiments, noting that the rate cut provides financial relief to the middle class. He highlighted the reduction of the Marginal Standing Facility (MSF) rate from 6.75% to 6.50%, making it easier for banks to borrow from the RBI. Despite these measures, inflation remains within the RBI’s target range, and GDP growth is stable. Rana believes that the rate cut will strengthen the economy while providing significant relief to both banks and their customers.

The RBI’s decision to lower interest rates aligns with efforts to ensure price stability while fostering economic growth, providing much-needed financial relief to borrowers, businesses, and the housing sector. The move is expected to have a positive ripple effect across various sectors, strengthening India’s economic recovery.

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The announcement, made by the Capital Market Authority (CMA) on Monday, allows foreign investors to engage with companies whose operations are tied to the annual influx of pilgrims. Mecca and Medina, home to the sacred sites of Islam, are central to the kingdom’s economic strategy, especially through the Haj and Umrah pilgrimages.

Saudi Arabia is aiming to welcome 30 million pilgrims annually by 2030, a key goal of its Vision 2030 reform plan to reduce the country’s dependence on oil revenues. In 2019 alone, the pilgrimages generated approximately $12 billion for the economy.

The CMA emphasized that the new regulations would encourage foreign investment and enhance liquidity for current and future real estate developments in Mecca and Medina. The move is seen as a significant step in the kingdom’s ongoing efforts to attract foreign capital to diversify its economic base.

The move also reflects a broader trend within the Saudi stock market, which has been open to foreign investors since 2015. Since then, the country has seen a surge in new listings, further integrating the Saudi market into the global investment landscape.

As part of the new investment policy, foreign ownership in the companies involved will be limited to shares, convertible debt instruments, or a combination of both. However, non-Saudis will be restricted from owning more than 49% of any listed company in the sector. This policy excludes “strategic foreign investors,” ensuring that the kingdom maintains control over key assets.

The announcement has already had a positive impact on the stock market, with shares of companies like Jabal Omar Development Company and Makkah Construction and Development Company – both of which own real estate in Mecca – rising by 10%.

In 2021, Saudi Arabia had already opened up opportunities for non-Saudis to invest in real estate funds within the boundaries of Mecca and Medina. This latest development marks another important step in the kingdom’s ongoing efforts to modernize its economy and attract global investment.

With these changes, Saudi Arabia is positioning itself as a significant player in the global real estate market, offering lucrative opportunities tied to one of the world’s most important religious and cultural events.

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