Anuj Puri, Chairman – ANAROCK Property Consultants

  • Maharashtra still leads with 20,718 projects & about 19,699 RERA-registered real estate agents
  • Gujarat comes second – 5,317 RERA-registered projects & 899 registered agents and agencies
  • Karnataka – 2530 projects & about 1342 RERA-registered real estate agents; Andhra Pradesh – 307 RERA-registered projects
  • West Bengal the only state with its own real estate law WBHIRA

It’s been two years since the deployment of the Real Estate Regulatory Authority (RERA) across the country and the Centre’s aim to enforce it in each state is gathering visible momentum.

Even the north-eastern states including Manipur, Meghalaya, Mizoram, Nagaland, and Sikkim – which earlier shied away from it – have agreed to officially notify RERA rules soon.

West Bengal is the only state which notified its own real estate law under West Bengal Housing Industry Regulatory Authority (WBHIRA).

It may be recalled that RERA intended to cover developers as well as real estate agents seamlessly across the country.

As it stands now, 

  • The commercial segment saw a total PE inflow of nearly USD 2.8 bn in 2018 – up from USD 2.20 bn in 2017
  • Office yields are 12-14% PA, rental yields for housing 2.5-3.5%
  • Residential revival depends on returning investor interest

 Anuj Puri, Chairman – ANAROCK Property Consultants

If the prolonged slowdown in the residential was not bad enough, to begin with, major policy overhauls over the last five years – DeMo, RERA, GST, amendments in the Benami Transactions Act etc. – literally paralysed the residential segment.

While any policy change brings with it some amount of teething pains, the residential segment took a prolonged hit because it had attracted the bulk of black money in the sector. Commercial real estate was far less affected, if at all.

Residential was also far less organized than the commercial office segment. Largely driven by IT/ITeS and BFSI sectors, the commercial real estate segment has been quite transparent and predictable – the primary criteria for foreign investors’ confidence.

Commercial Vs.

Anuj Puri, Chairman – ANAROCK Property Consultants

  • ₹4,51,750 Cr worth housing currently stuck in various stages of non-completion across top 7 cities
  • MMR and NCR together hold 72% share of delayed projects worth INR 3,49,010, Cr; South cities collectively hold a mere 10% overall share
  • Chennai has the least stuck stock with 8,650 units worth INR 5,620 Cr
  • Bengaluru far better off than Pune with less than half of the delayed stock of 86,700 units

If there is one ‘inheritance’ that the Government in power post the upcoming elections will not look forward to, it is tackling the issue of the massive burden of stuck housing across the top Indian cities.

Despite the setting up of a regulatory mechanism, countless homebuyers have been left in the lurch by their builders. Sadly, most of these stuck projects do not fall within the RERA ambit as they were launched years before it was implemented.

Also, with many states having diluted the Centre’s original RERA rules, homebuyers have only the courts to approach – a notoriously tedious task in India.

  • New supply across top 7 cities up by 27% q-o-q – from 55,600 units in Q4 2018 to 70,490 units this quarter; defies conventional election period trends
  • Pune and MMR see max. quarterly rise in both housing sales and new supply; absorption in Pune rose by 24%, in MMR by 19%
  • Bengaluru frontrunner in shedding unsold stock; sees 9% decline in Q1 2019 over previous quarter & a 27% yearly fall
  • New affordable housing supply sees over 47% q-o-q jump – from 20,800 units in Q4 2018 to 30,750 units this quarter
  • Annual housing sales rise 58%, new launches up by 91% across the top 7 cities

Defying previous election year trends when sales and new launches remained muted during this period, Q1 2019 saw both housing sales and new supply rise due to multiple Government sops in the first three months of 2019.

ANAROCK Property Consultants’ data shows that housing sales rose by 12% and new residential supply by 27% q-o-q due to sops in the interim budget, GST rate cuts and lowering of home loan rates post RBI’s recent repo rate cut.

Anuj Puri, Chairman – ANAROCK Property Consultants

As hoped for, the RBI has reduced the repo rate by another 25 basis points.

Back-to-back repo rate cuts by the RBI are indeed the perfect start to a new financial year, resulting in overall reduction of 50 basis points since February 2019.

The repo rate now stands at 6% – returning to the same level as in April 2018. This will augur well for the Indian real estate sector and keep the momentum going in the coming year.

As it is, the sector already saw an uplift in homebuyer sentiment due to the multiple sops offered by both the Government and the RBI in just the first three months of 2019.

These measures have contributed to a 12% increase in housing sales in Q1 2019 across the top 7 cities.

The RBI has done its part by slashing the repo rates. The onus is now on the banks to concurrently reduce home loan rates further, thereby encouraging more fence-sitters to take purchase decisions and giving another boost to the real estate sector.

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Anuj Puri, Chairman – ANAROCK Property Consultants

Self-redevelopment of old, dilapidated housing projects in cities like Mumbai is a much-talked-about new phenomenon and is rapidly catching on because it is, in many cases, a practically possible proposition. Self-completion of stalled projects is, however, another ballgame altogether.

The issue of stalled or delayed project is one of the major pain points of the Indian real estate sector currently. With buyers feeling the heat of delays, it is not surprising that some are now considering completing the projects themselves.

This falls within the realm of possibility if the project in question has sufficient cash flows but is delayed for other reasons.

Rather than being victims, some buyers prefer to take matters into their own hands and are forming groups, hiring contractors and even consulting with Government authorities about the process of completing their projects themselves.

The Challenges of Self-Completion

Realistically speaking, it is a mammoth task to build a real estate project, and only experts within this domain will know the inherent challenges. Projects stuck due to land ownership titles flaws or litigations may not be doable self-completion propositions for buyers at all.

Anuj Puri, Chairman – ANAROCK Property Consultants

Gudi Padwa is a traditionally auspicious time to invest in real estate in India. While Gudi Padwa is a Maharashtrian concept, the period of oncoming spring and the sense of renewal it brings is acknowledged across the country.

Punjab has its Baisakhi, Andhra Pradesh has its Yugadi, Tamil Nadu celebrates Puthandu and Kerala knows it as Vishu.

Historically, Indians have always seen certain dates as highly auspicious for property purchase and other wealth-creation measures.

For this reason, property sales tend to spike up during festivals like Gudi Padwa and builders align various offers, schemes and discounts with them to encourage this brief phenomenon.

In recent years, this trend came in on a more subdued note because of the prevailing conditions on the real estate market.

In fact, Gudi Padwa in 2018 was anything but a vibrant time for the property sector. It was defined by significantly lower housing sales than developers would have wished for.

However, 2019’s Gudi Padwa is very different.

The slew of sops offered by the Government in just the first three months of the year –

Anuj Puri, Chairman – ANAROCK Property Consultants

The new GST-related announcement has given real estate developers the choice to either opt for the old rates and the accompanying input tax credit (ITC) benefits or else to adhere to the new reduced GST rate of 5% without ITC.

While not exactly ground-breaking, it is indeed an intelligent move by smart play by the incumbent Government. With this decision, it has carefully side-stepped conflict with both builders and buyers.

Most developers reacted to last month’s announcement of the new GST rate minus ITC with trepidation.

There was justifiable worry about what would happen to the input stock which they have accumulated much before as part of their long-term purchases. For them, this new move will be beneficial.

However, developers choosing to go with the second option of new GST rates may not be able to hike property prices in the immediate future.

The possibility of prices being hiked was a matter of concern for aspiring buyers, but the fact is that developers can ill afford to test the currently fragile market sentiment by raising rates immediately.

Anuj Puri, Chairman – ANAROCK Property Consultants

Like it or lump it, but Modi’s victory in 2014 ushered a new era in Indian real estate – starkly marked by his vision to set the ‘house’ in order and alter the scarred face of an unorganized sector beset by unscrupulous activities.

He tightened the Centre’s grip on real estate – previously the largest dump-yard for black money hoarders – and introduced big-bang schemes to benefit consumers.

From major policy overhauls to amendments in old Acts, from a decisive impetus to infrastructure development, and from the arguably Utopian 100 Smart Cities and Housing for All by 2022, one thing is clear – the Modi government set the stage for Indian real estate to flourish in the long-term.

The measures he took to achieve this did have short-term negative impacts, but nobody can argue that this is a case where short-term pain is necessary for the sake of long-term gain.

That said, the on-ground implementation for most of these initiatives is far from what could have been achieved even in just five years.

Let’s examine the five major initiatives Modi undertook for the real estate sector –

  • NCR and MMR account for 55% share of total 6 lakh affordable units launched across the top 7 cities; NCR saw maximum supply
  • Of the total 3.98 lakh units sold in sub INR 40 lakh category, NCR & MMR hold 57% share
  • Pune comes next with 1.13 lakh units launched and approx. 75K units sold in the affordable segment
  • Bengaluru, Chennai & Hyderabad saw the least activity in the affordable segment 

Mumbai, 15 March 2019: It is the biggest shift that the Indian real estate market has seen so far. The previously ‘unaffordable’ real estate markets of NCR and MMR have led the thrust of affordable housing – in both new supply and housing sales – over the last five years.

ANAROCK Property Consultants‘ latest report ‘Affordable Housing: The Blue-Eyed Boy of Indian Real Estate confirms that these two regions contributed a whopping 55% share of the overall new budget housing supply between 2014 and 2018.

The report, which knowledge partners ANAROCK unveiled at the CII Real Estate Confluence 2019 in Mumbai today,