Anuj Puri – Page 18

71 Years of Independence – Housing for All by 2022?

Anuj Puri, Chairman – ANAROCK Property Consultants

When we reflect on India’s 71 year-long independence in context with real estate, one thought overshadows all others – affordable housing. No nation can call itself truly self-sufficient until there is a roof over every head.

We can talk about increased transparency and efficiency, but this has true relevance only if it is not just the industry that benefits but also the common man.

Embodying this very basic but profound premise, the Modi Government’s election manifesto of providing Housing for all by 2022 definitely rang all the right bells.

Obviously, it boils down to unleashing a massive number of affordable homes, and the Government has certainly gone the extra mile to make that happen. Unfortunately, what we have seen so far is more marketing hype than genuinely affordable housing.

Many developers have climbed on the ‘affordable housing’ bandwagon, but actually the term ‘affordable’ is in most cases just being misused to ostensibly show alignment to the ‘Housing for All’ mission.

Of course, builders have been generously applying terms like ‘affordable’ and ‘luxurious’

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

In the 71 years since India gained independence, the country’s real estate market has changed tremendously.

While it has not always been consumer-favouring throughout this period, it is certainly so today. The country’s cities have expanded, new economic drivers have come in and jobs are being created at all levels.

Likewise, appropriate housing is now being created for all income levels. The current Government has taken the needs of the people to heart and deployed various policy initiatives to ensure that homeownership becomes affordable and desirable.

Like the real estate market itself, the market for housing loans has become very competitive, giving consumers the edge of choice. Moreover, property prices have also rationalized across the country after the Government’s demonetization move late last year.

While it was initially expected that only the resale homes and land markets would be affected, it quickly became evident that the lowered sentiment had percolated in primary sales as well.

Many of the most important changes to positively impact home buyers in India so far have been at the policy level,

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

The concept of ‘by invitation only’ (BIO) housing projects tends to make Indians’ antennae perk up, and not necessarily from a demand perspective. This is one of those ‘grey’ areas of real estate which carry with them very strong emotional markers.

We’re not taking gated communities here – the acquisition of a property in a gated community rarely depends on anything more than a buyer’s net worth. By invitation only projects clearly exclude a certain segment of buyers, often for reasons other than their lack of purchasing power.

What Is The Market Size for BIO Housing?

This is a very ill-defined segment of housing, which means it cannot be ‘tracked’ in the classical sense of the word. The overall ultra-luxury sector represents about 5-6% of India’s real estate pie.

Any luxury project could be marketed as ‘by invitation only’ – either as a sales gimmick or on the basis of actual selection criteria other than purchasing power. However, BIO projects may not necessarily refer to luxury at all – which makes it even harder to track.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

The 25 bps increase in the repo rate announced in today’s third bi-monthly monetary policy was in line with our expectations. Amidst rising inflation, depreciating rupee and other global macroeconomic risks, this increase is fairly justified.

While this may lead to a hike in home loan rates as well, the overall real estate sector now rests on a strong footing and buying decisions may not be altered by these marginal changes.

As per ANAROCK research, nearly 60,800 units were sold in Q2 2018 across the top 7 cities of India, which is a 24% rise over the previous quarter. Amidst a 50% quarterly rise in new launches in Q2 2018 too, unsold inventory reduced by 2% from 7.11 lakh units in Q1 2018 to 7.0 lakh units in Q2 2018.

These numbers clearly indicate that the markets are now recovering from the shocks of structural changes and policy reforms. In fact, genuine home buyers have welcomed these actions which have imbibed the much needed financial discipline, accountability and transparency in the sector.

With lucrative deals on the table,

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

Miracles have been known to happen when a chequebook lies on the negotiation table

Stamp Duty Shocker

On the real estate market, upward revisions of any kind can doubtlessly hurt. Let’s take the Maharashtra Government’s proposal to levy a surcharge of 1% on stamp duty, effectively raising it to 6% from the existing 5%.

Such news, especially at a time when MMR’s real estate market was beginning to show some green shoots of revival with sales and new supply numbers rising, come as a shock.

This is a significant increase in the cost of real estate purchase that will hamper consumer sentiment – especially in the affordable housing segment.

On the one hand, the Government has rolled out multiple sops to boost affordable housing – and on the other, it is increasing the cost of properties. One can only hope that at least affordable housing is saved from this surcharge.

This is real and painful, and the impact is very hard to mitigate.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

New-age technology and data-driven concepts have significantly influenced asset management in the hotel sector today
Luxury hotel guests expect an international experience wherever they go and country-specific limitations are not accepted

Rising disposable incomes at the hands of the middle class, an increasing number of multi-millionaires and the growing quest to travel have given a major boost to the tourism and hospitality sector in India.

Over the last decade, this sector has accounted for nearly 7.5% of the country’s GDP. It is estimated that the Indian hospitality sector is likely to witness high double-digit annual growth by 2022.

The sector is a major direct and indirect employment generator, attracts massive FDI inflows and is the most important net foreign exchange earner for the country.

Considering its potential, the Government must necessarily incentivize investment into the hospitality sector by lowering the taxes on its development and giving it industry status.

Since it relies on a host of other sectors such as transportation,

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

Finance Minister, Piyush Goyal’s meeting with top industry stakeholders shows clear intent to salvage the sector

Despite the many interventions by the Government directly or indirectly benefiting the real estate sector in recent times, many pressing problems besetting this industry have remained unaddressed. A major one among these is the issue of stalled projects, which has been at the core of buyers’ discontent.

Taking cognizance of this and several other issues, officiating finance minister Piyush Goyal held a meeting with the top bankers and industry stakeholders to discuss measures that can be taken to bring the industry back on track.

After RERA, this was potentially the most direct and straightforward intervention move that the Government has taken on behalf of the struggling real estate sector.

The item of highest interest on the meeting agenda was the proposal to rope in the National Buildings Construction Corporation (NBCC) to complete stalled projects, a predominant burden of which is NCR.

What is at stake?

Even if 50% of the stalled projects are picked up by NBCC,

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

In any discussion about affordable housing in India today, the fact that a lot of such housing is actually lying vacant is bound to crop up.

One may point out that, especially with the Government’s avowed intention of providing Housing for All by 2022, this supply should logically go towards bridging the affordable housing gap.

However, it is obviously not that simple or it would already have happened. A lot of this budget housing inventory is lying vacant for good reasons.

Before we get into the reason, let’s take a quick look at the numbers. Around 237,000 units across top 7 cities belonging to the affordable housing segment (units priced less than INR 40 lakh) were unsold as of Q2 CY 2018.

This number pertains only to the unsold units of organized private developers and does not include Government housing schemes, which essentially means that the number would go further northwards if those are included.

Given the unrelenting requirements for urban budget housing, inventory that has been created in the major cities by seasoned organized players who know what they’re doing will eventually get absorbed.

by Anuj Puri

Below ₹ 40 lakh budget category rules supply, followed by mid-segment (₹ 40-80 lakh)
Of all supply between 2013-Q1 2018, affordable housing contributed 64%, mid-segment 23%

ANAROCK Property Consultants’ latest report ‘Kolkata: The Shining Star of the East’ analyzes the city’s major real estate trends, and highlights that affordable housing has gained significant traction in Kolkata.

The state government has given a major push to this segment with its a new housing scheme ‘Nijoshree’, which provides homes under two categories to people whose monthly income is < ₹ 15,000 and < ₹ 30,000.

An important finding of this report is that a majority of the supply of housing units is in < ₹ 40 lakh budget. In terms of unsold inventory ageing pattern, only 9% of the units are ready-to-move-in, whereas more than 50% units are due to complete in the next 2 years.

Approximately 1,19,000 units launched in Kolkata between 2013 and Q1 2018, of which 68% were added between 2013 and 2015.
Kolkata accounted for 7% of the overall unsold inventory across the top 7 cities of India as of Q1 2018.

by Anuj Puri

Affordable Housing Keeps the Momentum Going

Anuj Puri, Chairman – ANAROCK Property Consultants

Unsold inventory down 2% from 7.11 lakh units in Q1 2018 to 7.0 lakh units in Q2 2018
Unsold inventory declined 10% from 7.7 lakh units in Q4 2017

There has been a whopping 50% jump in overall new housing launches in Q2 2018 over the preceding quarter, with the maximum supply in the affordable segment (< ₹ 40 lakh).

Interestingly, the affordable housing supply increased by 100% in Q2 2018 over Q1 2018, and this supply has led the overall growth.

On the sales front too, housing sales across the top 7 cities of India also rose by 24% compared to Q1 2018, indicating that hitherto abstaining home buyers are back on the market.

Developers are working hard on clearing unsold inventory with attractive schemes, freebies and discounts. Moreover, the positive impact of the policy reforms including RERA and GST have begun to bear fruit.

71 Years of Independence – Housing for All by 2022?

How Independent Is Indian Real Estate Today?

Breaking the Myths Of ‘By Invitation Only’ Properties

RBI Monetary Policy Reaction

Increased Property Purchase Costs – Hype Vs. Reality

Luxury Hotels Asset Management – Keeping The Rolls Royce Rolling

Real Estate – FinMin To The Rescue?

Vacant Affordable Housing – Causes (and Solutions?)

Affordable Housing Dominates Kolkata Property Market – ANAROCK Report

New Housing Launches Up By 50% In Q2 2018