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01 Mar 2024, Edition - 3153, Friday

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Residential Real Estate on Path to Recovery

Covai Post Network


With State Bank of India, the country’s largest lender, reducing interest rates on home loans by 25 basis points to 7.9% and other lenders likely to follow suit, the year 2020 seems to have begun on a promising note for developers, particularly for residential segment which had a tough time finding homebuyers in 2019. According to PropTiger.com, during the first nine months of the current calendar year, the overall sales across 9 cities stood at 2,40,736 units as compared to 2,54,210 units a year ago, thereby registering a 5 per cent fall. In the same period, the launches too declined. Between January and September 2019, the launches stood at 1,41,934 units as against 2,14,448 units in the corresponding period of 2018.


Residential Real Estate


Mr. Dhruv Agarwala, Group CEO, Elara Technologies, the country’s only full stack real estate technology platform that owns PropTiger.com, Housing.com and Makaan.com said: "It would be an understatement to say that it was a tough year for the housing sector. Sales were anaemic despite the help that came in the form of generous interest rate cuts from the RBI and tax benefits from the government. While these measures failed to lift both sales and launches in 2019 but will have a positive bearing in the medium-to-long run.


The silver lining amidst the dark clouds was the fact that the overall unsold inventory in the top markets declined 13% y-o-y primarily because new launches fell at a faster pace than sales. “The year 2020 however comes with a fresh promise of growth. With the newly introduced AIF (Alternate Investment Fund), Proposed Thresh-hold introduction in the IBC/NCLT laws, policy frameworks for new product typologies like affordable residential plots and commercial plots, active steps by the government to increase liquidity in the system with increased lending, and a focus on an overall higher GDP growth, India looks poised to finally break the gridlock of stuck projects and move towards a healthy real estate cycle,” said Nayan Raheja, Executive Director, Raheja Developers.


Adding to it, Dhiraj Jain, Director, Mahagun Group pointed out, “The overall inventory level is coming down and that augurs well for the sector. With interest rates nearing an all-time low, we expect end-users demand to revive.”


Developers are also hopeful that some of the measures announced by the Government to revive the economy as well as the sector will start bearing fruit in the coming year. “The Rs. 25,000 crore realty fund to salvage stalled projects is likely to go a long way in reviving sentiment in the market during 2020 and ahead. Both affordable and mid income segments are likely to benefit from the same,” Mr. Vikas Bhasin, CMD, Saya Homes stated.


With budget round the corner, the Government may shower some sops on individual tax payers, which in turn will benefit the sector immensely. “For the revival of economy, the revival of consumption is of utmost importance. As the Government announced massive corporate tax reduction just a few months ago, it is largely believed that the Government will announce a similar cut for individual taxpayers in the budget which is likely to be presented in the first week of February. Needless to say, it will benefit real estate among others,” said Vaibhav Jain, CMD, Rise Group.


Hopes of real estate are also riding high on the emergence of satellite cities, which have seen a lot of infrastructural development recently and are providing buyers with affordable options as compared to the major cities. “With ever rising job opportunities as well as educational and medical facilities, a large chunk of people prefer satellite cities. Enhanced connectivity and better infrastructure are also playing an important role in this trend. As such, the revival of the real estate will be led by these cities and they will outperform metro cities,” said Gaurav Gupta, President, CREDAI Ghaziabad.


Performance of the sector is also likely to improve due to the acceptability of affordable housing, which is getting positive response. A total of 240,736 units were sold in the nine months period, of which nearly half of the units were affordable homes. The trend is likely to continue unabated for the next couple of years. “Even in challenging year like 2019, affordable housing did reasonably well. Most of our project offerings are in affordable category and we received encouraging response of the customers especially in the second half of the year. With Government announcing several measures in the last couple of months, we expect revival is round the corner and affordable housing will play a key role in it,” said Yash Miglani, Managing Director, Migsun Group.


Last but not the least, the sector will benefit from the multiple new concepts that gained prominence in 2019. Parveen Aggarwal, Founder & Chairman, Signature Sattva said, “The year 2019 witnessed remarkable growth by becoming customer and end-user driven. Ideation of new concepts such as co-working, student housing and bespoke concept of workspaces has shown new opportunities. Government initiatives & policies expected in 2020 will also give a new push to the industry. In the coming year, developers will be able to offer great location and new product mix with advanced & competitive amenities across micro & macro markets. The biggest beneficiaries of this positive outlook will be the areas in the outskirts and suburbs of the major cities.”

Source: Newsvior

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