The doomsayers are having a field day with predicting that Brexit will cause the UK real estate market to dry up and blow away. In India, we are quite used to gleeful prophecies of doom regarding real estate and take them with a healthy pinch of salt.
No doubt, every change involves disruption and confusion in the beginning. In the case of Brexit, the magnitude of change is undoubtedly massive considering the sheer size and also the diversity of the involved countries.
It is not only their economies which will be affected – like in every death or divorce, there will also be grief. Grief is an emotion, and for that reason, it will affect market sentiments for a while.
Bangalore, Hyderabad & Chennai saw a 77% increase in new residential supply in 2018; NCR 16%, MMR & Pune 17%
Chennai led new launch supply with a 98% increase, Bangalore 91%, Hyderabad 43%
Bangalore, Hyderabad & Chennai saw a 20% increase in housing sales; 18% in North, 15% in West
The year 2018 was a mixed bag of highs and lows for the Indian real estate sector. The initial pangs of policy alterations seemed to fade away with each region seeing visible signs of recovery across segments.
Even as the liquidity crunch and stalled/delayed projects continue to plague the sector, the main southern cities of Bangalore, Chennai and Hyderabad actually saw faster growth momentum than their northern counterpart NCR.
Retail, commercial and residential real estate saw a lot more activity in Southern cities than in the North.
As per ANAROCK data, the southern cities raced far ahead of those in the North, including entire NCR.
India continues to strive for a more globally-aligned image for urban living conditions, which is what the Smart Cities mission is really all about.
However, the primary need if India’s housing market is to rank higher on global benchmarks of urban liveability is still a numbers game. Access to quality affordable housing, if ‘quality’ is primarily defined by location, is still a major challenge for most Indian citizens.
The dearth of affordable homes is only widening, with deficit numbers predicted to reach 30 million by 2022. This, despite the fact that the current Government has clearly understood that quality, quantity, availability and affordability of housing are integral drivers for a country’s economic competitiveness.
To be fair, India has ramped up massively on affordable housing, and this segment has been leading the pack in Indian real estate over the past 3 to 4 years.
The massive impetus that the Government has given to the one electoral promise which got the most attention – Housing for All by 2022 – has certainly caused a major sea-change.
RBI’s decision to slash the repo rate by 25 basis point to 6.25 % is a welcome and unexpectedly positive move, given the sops that the recent expansionary budget gave to farmers at an additional cost of Rs 75,000 crore per annum.
It was also overdue, as this has been the first cut in a long time. It definitely augurs well for the real estate sector which also received a budget bonanza in the previous week.
Rate cuts give a substantial push to property buyer sentiments, and it was certainly high time for such a cut.
Home loan interest rates increased by as much as 5-7% in the last year because the RBI hiked its repo rates by 50 basis points over the same period. In other words, home loans had become a more expensive proposition.
However, the real estate market does not depend only on marginally improved buyer sentiment – there are larger issues that hold the sector hostage right now.
The liquidity issues post the NBFC crisis are a bigger concern. NBFCs and HFCs have seriously curtailed disbursements to developers.
Just 63,000 ready units currently benefit out of total 6.73 lakh units across top 7 cities
Nearly 22,000 ready unsold units completed before 2017 don’t benefit from new rule
33% of 5.88 lakh unsold under-construction units in the luxury segment – 49% in MMR – will not benefit immediately
Just when the real estate industry was preparing to give the budget a complete thumbs down, the finance minister sprung a surprise ‘bonanza’ for the sector in the last 10 minutes of his speech. Or so it seemed.
Without a doubt, affordable housing gained amidst what was essentially a mass-appeal budget. However, it was the extension of tax relaxation on notional rent for unsold inventory for another year that cheered developers.
However, under closer scrutiny, it is unlikely to benefit a majority of them as on date.
Chennai Overtakes Bengaluru, Unsold Inventory Less Than 50% Of IT Capital – ANAROCK Report
Chennai’s current unsold housing stock at 30,800 units against 73,300 units in Bangalore
Avg. property prices lowest in 4 years at INR 4,900 per sq. ft.
72% new supply in last 6 years in under INR 80 lakh budget range
PE investment increased by 15% in 2018 against 2017
Chennai, 4th February 2019: Bucking all odds including political uncertainty and a major natural calamity, Chennai has trumped southern counterpart Bengaluru in terms of upbeat residential real estate activity.
ANAROCK‘s report ‘Chennai: From Resilience to Growth‘ confirms that the city is only behind Hyderabad in unsold stock numbers, and has the second-lowest unsold housing inventory of India’s top 7 cities in India.
As the event’s knowledge partner, ANAROCK released the report at RECON, an initiative by Tamil Nadu Real Estate Consultants Association, in Chennai today.
The interim budget was more or less a vote bank-facing exercise – an electoral pitch that drew attention to past achievements.
Vote-bank directed announcements included benefits to 12-crore small farmers via credit of INR 6k/year directly into their bank accounts, and also to 10 crore labourers by way of direct pension bonanza.
Direct and indirect positives for the real estate sector
Boost to Affordable Homes:
People earning up to 5 lakhs will get a full tax rebate. However, if one invests in specified Government saving schemes then the tax exemption extends to Rs. 6.5 lakhs. This can have good implications for affordable housing, but not really on the mid-income housing.
The Government also extended the benefit of tax exemption for developers by 1 more year, up to 2020 now. This, too, will give a push to the affordable housing segment.
Electricity for all by 2019 could have positive implications by making more far-flung areas liveable and therefore more viable for affordable housing.
The standard deduction for the salaried class was raised from Rs.
Of the total current 6.73 lakh unsold units across top 7 cities, approx. 85,000 are ready-to-move-in
NCR & MMR together account for 54% total unsold RTM homes
Hyderabad has least unsold RTM stock priced below Rs. 80 Lakh with approx. 3,040 units
Indians looking to buy homes in 2019 have a very compelling rationale to opt for ready-to-move (RTM) homes, which – apart from being exempt of the 12% GST ambit – are available plentifully.
As per ANAROCK data, out of the total 6.73 lakh units of unsold housing inventory, nearly 85,000 units are currently ready-to-move-in across the top 7 cities. Interestingly, out of these total unsold ready-to-move options, nearly 60% of units are in the affordable and mid segments priced below Rs. 80 lakh.
Returns on investment in different real estate asset classes
Documentation, home loans, tax implications compliances
Best cities and micro-markets in which to invest
Whether the real estate market remains bullish or bearish, NRIs prefer a place back in India – not just for investment returns but also to remain rooted in their country of origin.
Previously, NRIs (like most other buyers and investors) had every reason to be leery of the Indian real estate market. Today, game-changing policies like RERA and GST have now boosted confidence and transparency and streamlined the property-buying process for NRIs.
This has begun fuelling new NRI investments into the Indian property market. The fact that the rupee value against dollar depreciated in 2018 was also a sound reason for NRIs to view Indian real estate more favourably.
And, of course, developers have been offering substantial freebies and even discounts, apart from interesting payment plans, to draw NRIs as well as domestic buyers to their projects.
ANAROCK Bags Exclusive Mandate for Swaminarayan City in Mumbai’s Dombivali
Limited-edition housing at Mumbai’s latest major pilgrimage destination
Mumbai, 25 January 2019 – Leading real estate services provider ANAROCK Property Consultants today announced that it has accepted an exclusive mandate to market 550 limited-edition flats in Swaminarayan City at Dombivali West, Mumbai.
The project, which leverages excellent location along with a high spiritual aspiration quotient, is spread over 148 acres in Retigaon in Dombivali (West) – one of Mumbai’s fastest-growing suburbs. Its proximity to the Ulhas river offers unmatched views of this famous water body.
Bappaditya Basu, Director & Head – Channel Partner Business, ANAROCK Property Consultants says, “The project’s USP may be seen to be that it abuts India’slargest Swaminarayan Temple coming up over 14 acres in Dombivali.
However, Swaminarayan City also provides exceptionally high location value. In fact, the mounting housing demand in Dombivali had prompted the launch of nearly 2,960 new units in 2018.