Anuj Puri, Chairman – ANAROCK Property Consultants

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.

If we apply to the process of the Five Stages of Grief outlined by Elisabeth Kubler-Ross, we can see that the involved countries have already moved from denial and anger to bargaining and depression.

What inevitably follows is acceptance – and with acceptance comes the restoration of normalcy, stability and even growth.

Brexit is currently the source of a lot of uncertainty,

Anuj PuriAnuj Puri, Chairman – ANAROCK Property Consultants

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.

Thanks to this impetus,

Anuj Puri, Chairman – ANAROCK Property Consultants

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.

Anuj Puri, Chairman – ANAROCK Property Consultants

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.

Anuj Puri, Chairman – ANAROCK Property Consultants

  • 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.

RTM quotient of Unsold Stock

Cities Total Unsold Units Approx. RTM Units Approx. RTM % of Total Unsold Units
Bangalore 73,340 12,000 16%
Chennai 30,840 8,800 29%
Pune 87,440 8,600 10%
Kolkata 49,470 5,400 11%
NCR 1,86,710 23,500 13%
MMR 2,19,490 22,300 10%
Hyderabad 25,960 4,400 17%
PAN India 6,73,210 85,000 13%

Source: ANAROCK Research (RTM= Ready-to-move-in)


Anuj Puri, Chairman – ANAROCK Property Consultants

Redevelopment is a fact of life in any ageing, land-starved metropolitan city. In India, no city defines this dynamic quite as accurately as Mumbai.

The conventional norm of redevelopment in India involves appointing developers to redevelop old and dilapidated housing projects.

However, several housing societies in Mumbai are now contemplating self-redevelopment instead. We can dispense with the usual metaphor ‘not as easy as it sounds’ – this does not sound easy by any definition, and it isn’t.

Broadly, some homeowner groups are now taking the route of appointing their own architects, contractors and project management consultants to execute the redevelopment of their projects.

These can be single stand-alone buildings or housing societies of more than one building. For funding self-redevelopment, the owner collective will invariably opt for bank loans.

The Benefits of Self-Redevelopment

For redevelopment by any means, homeowner groups are motivated by the prospect of larger, more secure homes with vastly improved facilities and amenities.

The only reason why a developer would undertake redevelopment is obviously that he gets a massive stake in the whole undertaking.

Anuj Puri, Chairman – ANAROCK Property Consultants

This is, without doubt, a very favourable market for homebuyers looking to purchase properties for their own use. One of the obvious reasons is the abundance of options in all categories of housing to pick from.

Also, property rates have reduced considerably across cities. Nevertheless, many fence-sitting buyers still hope for further corrections.

There may still be scope for some marginal rate corrections in certain depressed markets – but as we often say in the industry, timing the market is a game only investors should play. There are no guarantees for when, where and even if corrections will occur.

Certainly, a whole country’s real estate market does not witness synchronized corrections like on the stock market, where everyone is affected simultaneously and to the same extent.

For genuine homebuyers who recognize a good thing when they see it and can call it good enough, it has certainly never been a better time.

The Government has also provided several incentives for first-time homebuyers, especially in the budget homes category, and developers are rolling out year-round attractions in their keenness to close transactions.

Anuj Puri, Chairman – ANAROCK Property Consultants

  • The interim budget may focus on wooing voters rather than boosting specific industries
  • PMAY and employment shortfalls must be addressed
  • Funding announcements without implementation guidelines will not suffice

Before every annual Budget, the real estate sector trots out a highly optimistic (and unrealistic) wish list to the Finance Ministry.

Whether the industry actually expects the upcoming Budget to cure all its woes with a wave of its magic wand is beside the point. Unrealistic expectations – many completely outside the purview of the Finance Ministry – have become the norm.

Single-window clearance, industry status and hiked tax exemptions limits which will miraculously revive demand for properties have become the usual suspects in such wish lists.

Let’s be rational in our expectations from an interim budget which is announced shortly before general elections.

Though the larger ‘acche din’ premise is debated to the present day, the first Union Budget under the Modi Government in 2014 was certainly a harbinger of change for buyers and builders.


  • A significant drop from 47 months of inventory overhang in Q4 2017
  • NCR still constitutes 52 months’ inventory overhang; Bengaluru & Hyderabad at an all-time low of 17 months each
  • Sales exceed the number of units launched the second year in a row
  • property sizes across the top 7 cities shrink by 8% compared to 2017 & 19% since 2016

Mumbai, 15 January 2019: Despite all headwinds including the liquidity crisis in 2018, housing sales rose by 18% and new launches by 33% across the top 7 cities compared to 2017. Residential inventory overhang reduced to a year-low from 47 months in Q4 2017 to 33 months in Q4 2018 across the top 7 cities.

The DeMo effect in late 2016 had pushed up unsold inventory to 47 months in Q4 2017 from 40 months in Q4 2016. An inventory overhang of 18-24 months signifies a fairly healthy market.

“Having absorbed a lot of the impact of various structural changes, the Indian real estate sector seemed poised to grow from the previous year,” says Anuj Puri,

Anuj Puri, Chairman – ANAROCK Property Consultants

  • Benefits aside, a cut could have been a major setback to the affordable housing segment
  • GST rate cut, clarity on / abolition of ITC – boosted demand vs. actual sales

After much anticipation, the GST Council has failed to deliver a final verdict on GST applicable on real estate – but how much would it really have mattered?

Here’s a Utopian vision – the government would announce a GST rate cut, homebuyers would cheer up since prices would reduce marginally, and the market revives. Really?

The biggest paradox in Indian real estate is that numbers suggest a massive burden of unsold housing stock in the midst of a chronic shortage of housing. As long as prices don’t reduce significantly, the housing shortage will only widen regardless of tax sops.

What we have today is a nation of aspiring homebuyers, many of which are perpetually on the fence, waiting for a slew of minor policy windfalls to cumulatively make a home purchase feasible and attractive.