Stable repo rates expected to boost commercial realty developments

Predictable borrowing costs and GST reforms are expected to boost commercial real estate, housing demand and investor sentiment during the festive season across India

The Reserve Bank of India’s (RBI’s) unchanged stance on the repo rate is expected to spur developments in commercial real estate, where stable and predictable costs of capital are essential for large-scale investment decisions, said industry watchers.

 

“This predictability is critical for the commercial real estate sector, which continues its record-breaking run. Stable capital costs are essential for the large-scale investment decisions that have propelled India’s office market to new heights. The RBI is signalling that the Indian economy’s fundamentals are strong enough to weather external storms, a message that will resonate strongly with global investors,” said Dr Samantak Das, chief economist and head – research and REIS, India, JLL.

 

India’s commercial real estate has been witnessing an upcycle. According to Anarock, net office leasing in the first half (H1) of 2025 grew by 40 per cent year-on-year (Y-o-Y) to 26.8 million square feet (msf) across the top seven cities. Meanwhile, India’s top eight markets leased 32.1 msf of warehousing space, up 42 per cent Y-o-Y, driven by the manufacturing sector.

 

Anshul Jain, chief executive – India, South East Asia and Asia-Pacific office and retail, Cushman & Wakefield, said, “We expect borrowing rates—including home loans—to ease further, and lending to listed debt securities like real estate investment trusts to improve. The RBI governor’s message is positive, boosting confidence in India’s real estate growth story. Predictable borrowing costs will help developers plan capital-intensive projects and drive investment across real estate and infrastructure.”

 

According to Knight Frank India, office real estate received private equity investments of USD 706 million in H1 2025, indicating investor faith in select high-quality Grade-A assets. Retail real estate received investments of USD 481 million, while warehousing attracted USD 50 million.

 

Industry experts also believe that stability will help developers manage project-level economics effectively. “For developers, predictable credit conditions combined with lower compliance costs strengthen project economics and investor confidence,” said Sanjay Dutt, managing director and chief executive officer (CEO), Tata Realty and Infrastructure.

 

While developers believe that a rate cut would have boosted housing sales momentum, they expect goods and services tax (GST) rationalisation, developers’ offers, and the full benefit of transmission to push sales in the last quarter of this year. The move is expected to enhance homebuyer confidence, particularly in the affordable (priced below Rs 40 lakh) and mid-income (Rs 40–80 lakh) segments.

 

Shrinivas Rao, CEO, Vestian, stated that the stable monetary stance is expected to bolster confidence in the real estate sector, fuel demand, and attract fresh investments. Meanwhile, Vimal Nadar, national director and head of research, Colliers India, said, “Banks are yet to fully transmit the earlier 100 basis points repo rate reduction and are expected to complete this soon in the ongoing festive season. This is expected to benefit the real estate sector, especially homebuyers in the affordable and mid-income segments.”

 

According to Anarock, affordable housing’s share in overall sales across the top seven Indian cities declined from 38 per cent in 2019 to just 18 per cent in 2024.

 

Nitin Bavisi, chief financial officer, Ajmera Realty & Infra India, said that for the housing sector, especially during the festive period when demand normally surges, consistency in monetary policy sends a strong positive message, boosting customer confidence.

 

Earlier, housing sales fell 9 per cent Y-o-Y in the third quarter (Q3) of 2025 to 97,080 units, amid affordability pressures, rising costs, and uneven demand, according to Anarock. In the first quarter (Q1) of 2025, sales had dropped 28 per cent Y-o-Y, and in Q2 they fell 20 per cent.

 

Anuj Puri, chairperson, Anarock Group, said, “The recent GST rate cuts provide significant relief. With GST on cement reduced from 28 per cent to 18 per cent, construction costs are expected to fall by 3–5 per cent, potentially reducing home prices by 1–1.5 per cent for buyers. This reduction could save homebuyers Rs 1–3 lakh on purchases, particularly benefiting affordable and mid-segment housing where cost sensitivity is high. The combination of stable interest rates and lower construction costs creates a favourable environment for housing demand, especially during the ongoing festive season.”

 

Additionally, with the income tax benefits announced in the Union Budget 2025, GST reforms, and earlier rate cuts, the developer community is optimistic about sales momentum with a festive boost, despite the moderation observed over the past three quarters.

 

Pradeep Aggarwal, founder and chairperson, Signature Global (India), said, “With the festive quarter beginning on a strong note and GST reforms further lifting sentiment, the housing sector is likely to continue witnessing steady demand across segments. Traditionally marked by heightened consumer activity, this period creates a favourable environment for property purchases and further strengthens market optimism.”