Category: Anuj Puri

Housing India’s Construction Workers

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

The construction sector is one of the largest employment generators in India, and the country will need approximately 76.5 million workers in the building, construction and real estate sector by 2022.

Despite it being a job creation engine for people from the economically weaker section of society, the basic working conditions of construction workers have been long ignored.

Migrant workers are the most vulnerable – they are more often than not forced to work under inhuman conditions, and are simultaneously bereft of any real bargaining power.

Under the labour laws, migrant construction workers are entitled to housing and other social security benefits apart from minimum wages, overtime payments and weekly offs.

However, on the ground, the implementation of this clause of the labour law has been abysmal. In far too many cases today, it can be said that the bottom line literally consumes the bottom of the pyramid.

Without a doubt, a more humane approach needs to be taken towards migrant construction workers. It has previously been suggested that the amount collected through construction cess can and should be used for providing rental accommodation to migrant workers.

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Monetary Policy – Lending  Rates Unchanged, But May Inch Upward Soon

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

The Reserve Bank of India’s stance of keeping the repo rate unchanged at 6% is exactly along the lines of our expectations.

Considering that the inflation has inched up (Dec-17 CPI at 5.21%, up from 3.58% in Oct-17 and well above the target of 4%), crude oil prices are rising in the international market and the Government plans to increase the crop support price, maintaining the lending rates unchanged is justified.

We believe that the interest rates will soon start inching upwards, which is already being factored into the rising bond yields for the past few months.

The real estate sector can and should look at the long-term economic prospects and implications on which the monetary policy decisions are based, as these will dictate the growth trajectory for the sector.

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Budget 2018-19: Balanced But Not A Boon For Real Estate

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

All eyes were on the Finance Minister as he delivered his fifth full Union Budget – the last one before the general elections in 2019.

As expected, the budget turned out to be populist and sounded excessively cautious while the need of the hour was to provide a positive boost to the economy, which is reeling under the pressure of structural changes and policy reforms.

The Budget did not offer any substantial incentives to individual taxpayers, with slabs remaining constant. A change in the standard tax deduction in lieu of transport and medical expenses, which now stands at INR 40,000, was the only gift to the salaried class.

There was no change in tax savings on home loans, nor were the 80C limits raised. While this put paid to any hopes for significantly increased home buying appetite, there were some notable announcements with positive implications for the real estate sector:

  • The continued push for affordable housing

As many as 51 lakh houses in rural areas are to be built in 2018-19.

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Will Budget 2018-19 Boost Ready-To-Move Property Absorption?

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

With Union Budget 2018-19 just around the corner, the Indian real estate market waits with bated breath to see how it can potentially benefit.

In fact, it has never been a better time for aspiring homebuyers, as there is a more than generous stock of ready-to-move housing options across most Indian cities.

Ready properties are the pièce de résistance of 2018, not least of all because they are the most de-risked purchase proposition, do not attract GST and offer instant gratification. After all, owning a house is the culmination of almost every Indian’s lifetime efforts and aspirations.

The sense of security, achievement and social stature linked to home ownership is what has for long been driving the demand for – and supply of – residential developments across India. All major roads, railway stations and airports are flanked by hoarding advertising real estate projects.

With a massive urbanization rate of more than 30% (estimated to reach 40% by 2030), the demand for homes in India an assured long-term story in which chapters will continue to unfold.

However,

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Why Residential Real Estate Is A Fading Blip On Private Equity Radars

by Anuj Puri

Commercial, warehousing the flavours of 2018; affordable housing’s continuing allure

Anuj Puri, Chairman – ANAROCK Property Consultants

Sluggish demand along with bleak returns on investment has dented the previously glowing charisma of Indian residential real estate in the preceding 2 to 3 years.

The cascading effect of demonetization, implementation of RERA and GST further dampened investment traction in this segment in 2017, leading to a decline in average prices between 5 to 7% during the period.

Although the tail-end of 2017 showed some signs of revival in the sector and there was an uptick in sales of ready-to-move-in properties, the multitude of existing challenges will continue to be felt in 2018.

The huge unsold inventory on the market and the possibility of distress sales in the offing will limit the possibilities of any significant price appreciation in near-term.

During the year 2017, PE investments into the residential asset class fell significantly and witnessed a loss of around 25% in overall share compared to the previous year. Also, for the first time in last three years, it lost its #1 position in PE investment share.

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6 Ways The Union Budget 2018-19 Can Bolster India Real Estate

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

Every year, the Union Budget presents the Government with an opportunity to tweak the direction that the Indian economy is taking. Sometimes, hard decisions are taken which, while necessary, do not necessarily go down well with Mr Everyman.

At other times, the Union Budget is clearly meant to be a crowd-pleaser. This invariably happens when an incumbent Government is finishing its term and general elections loom, for obvious reasons.

The current Government has done a lot for the Indian real estate industry, even when it was in the form of hard decisions like demonetization and the disruptive but very necessary RERA.

With the hard decisions now taken, the Indian real estate sector fervently hopes that it is at the receiving end of the benevolence implied in a populist budget. This benevolence needs to go beyond improving personal finances and the implied boost to real estate investment appetite.

Despite the Government’s very proactive stance towards cleaning up and regulating the sector, there are still several policy-related pain points where the coming Union Budget can make a decisive difference:

1.

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Is The ‘Human Touch’ In The Real Estate Business Now Obsolete?

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

With the advancement of the Internet and e-commerce, the ‘human touch’ and ‘face-to-face’ interactions are on the decline.

Hand-written letters and postcards have gone the way of the dinosaurs, and even e-mails are rapidly becoming passé as the world shrinks into smartphones and messaging apps replace almost all other modes of communication.

The way we shop has definitely undergone a massive sea-change over the past few years. Less than five years ago, ordering food, groceries, clothes, furniture and a whole lot of other commodities and services with the click of a button would have seemed like far-fetched science fiction, but it is a reality today. And it’s not only in shopping where the human touch faces obsoletion, but almost all forms business.

The Internet was not the only factor involved in the ‘dehumanizing’ process. As an asset class, real estate had become increasingly commoditized and home purchase became more of an investment play done purely for financial gains.

Thankfully, the slowdown in the Indian property market put paid to the extremely damaging speculative activity that drove up prices and created a staggering burden of unoccupied homes held solely for capital appreciation.

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How Residential And Retail Real Estate Sync Up In India

by Anuj Puri

Matching shopping options with local purchasing power

Anuj Puri, Chairman – ANAROCK Property Consultants

Whenever I’m asked how real estate is performing in India, I have to ask the questioner to be a bit more specific. Real estate is not a single industry but consists of various categories/asset classes, and each behaves differently at the same time and at different times.

Residential, commercial and retail real estate each serve a very separate and distinct purpose, respond to a different type of demand and attract different types of investors.

However, it is equally true that all three categories are inter-related because they all depend on each other to drive growth. Residential projects tend to crop up around commercial office catchments, because that is where jobs are created, and employment drives the financial ability and appetite for homeownership.

Likewise, retail real estate developments are only feasible in and around residential and commercial catchments, since retail needs customers. What differs in these three asset classes are the ticket sizes, investment rationale, and investment horizon.

To invest in either,

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Why 2017 Was The Year Of The Home Buyer In India

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

2017 was an unprecedentedly rough one for the Indian real estate sector with the implementation of RERA, GST, demonetization and several other reforms and initiatives.

The residential market was beset by more policy changes in this single year than in the two preceding decades. The resulting distress signals that this notoriously change-averse sector sent out were loud, though not necessarily clear. However, there were also positive vibrations.

Tuning Into Residential Real Estate’s Distress Signals In 2017

In 2017, the residential property sector saw:

  • The lowest rate of new project launches in last five years:

2017 witnessed a significant fall in new launches across top 7 cities, which declined by around 45-50% compared to the previous year. While in 2016 the top 7 cities added around 2.4 lakh units, new launches shrunk to only 1.25 lakh units in 2017.

  • Property prices either stagnating or correcting:

In 2017, due to a massive burden of unsold stock and low demand,

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5 Reasons Why 2018 May Not Bring the Big Residential Revival We Hoped For

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

The year 2017 will be remembered as the year of disruption and radical policy reforms in the history of Indian real estate.

While RERA and GST might be considered as a disruption by the industry, the government’s sustained efforts towards promoting affordable housing provided some hope to the beleaguered residential sector.

The year 2017 was another watershed year for the residential sector, where neither new launches nor sales could ignite the hope of revival. As 2017 comes to end, developers are hoping that the year 2018 will bring in the much-anticipated revival of the residential sector.

Unfortunately, 2018 is expected to be no different than 2017 because of these notable trends:

1. Weak consumer sentiment will limit the revival

The weak job market, and slow GDP growth rate has negatively impacted consumer sentiment and they might continue with their stance of being extra cautious and conservative while making long-term financial commitments.

2. Developers will be under immense stress

Developers will continue to be under tremendous pressure for completing the projects as the consumer activism will increase and cases delayed possession will be taken up seriously by RERA.

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