Residential Real Estate – Page 31

Why 2017 Was The Year Of The Home Buyer In India

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,

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.

by Prashant Thakur

Prashant Thakur, Head – Research, ANAROCK Property Consultants

Once an anonymous destination comprising of small villages in the peripheral areas of Pune, Hinjewadi is now a prime real estate hotspot.

With the launch of the Rajiv Gandhi Infotech Park and consequent entry of various IT-ITeS majors and multinational companies, Hinjewadi has witnessed spectacular growth in working population.

The accompanying demand for homes, backed by improving social and physical infrastructure, has made Hinjewadi one of Pune’s fastest-growing micro-markets in Pune.

During the early 2000s, the Maharashtra Government introduced its game-changing IT-ITeS Policy which offered liberal incentives to the technology-driven industries to set up operations in Hinjewadi.

Waiving off stamp duties for owned and leased properties built on MIDC land also aided the large-scale development of this region. Thus, the 2,800 acres Rajiv Gandhi Infotech Park, also known as Hinjewadi IT Park, came into existence.

IT Leads the Way

The establishment of the Hinjewadi IT Park acted as a powerful magnet for IT-ITeS companies, whose arrival and expansion have been the primary growth drivers for the real estate market of Hinjewadi.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

2017 was quite an eventful year for the Indian economy at large, and the real estate sector got more than its usual share of the limelight.

A series of reforms and structural changes tore into the very heart of the industry, affecting a surgical strike at market opacity, unaccounted funds transactions and customer victimization.

The entire real estate fraternity had to re-orient their businesses to sustain in the changing environment.

Already, the real estate sector has shed a massive part of its unorganized and fragmented nature, and the ways and means of doing business in changed for good in 2017.

The incumbent Government maintained a laser focus on changing the fabric of the Indian economy, with direct implications on the real estate industry, by implementing highly impactful reforms:

Cracking down on black money transactions with demonetization
Setting up RERA – a regulator to increase financial discipline, improve transparency and empower property buyers
Introducing GST to boost transparency in taxes and improve business efficiency
Curbing anonymous property transactions and ownership by incisive amendments to the Benami Properties Act

Simultaneously,

by Prashant Thakur

By Pradeep Mohandas – Own work, CC BY-SA 3.0, Link

Old chimneys give way to swanky high-rises in Mumbai’s Queen of the Suburbs

Prashant Thakur, Head – Research, ANAROCK Property Consultants

It was known primarily as an industrial destination with the presence of companies such as RCF and BARC. Today, Chembur is transforming rapidly into a premium real estate destination of Mumbai, with industrial units, dilapidated slums and old buildings being replaced by modern high-rise towers.

The Mahul creek, home to thousands of flamingos migrating from Gujarat every year from November to June, was once a major international port of Mumbai. The once gigantic hills near Trombay were gradually razed for various reclamation works in the city.

Proximity to a previously operational port played a key role in Chembur’s development as one of Mumbai’s major industrial locations.

Subsequently, Chembur also saw the development of small housing colonies for the working population to reside in, and the micro market started evolving as a residential location. Also due to proximity to the port,

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

The massive gap of affordable housing has drawn the Government of India’s focused attention and resulted in many initiatives to such housings.

Cognizant of the constantly growing demand for affordable homes across the country, the market has started responding with a significant rise in new launch supply in this segment over the last one year.

On examining the composition of the new launch supply across the top Indian cities in the current year (till Q3 2017), it emerges that affordable housing (units with average ticket sizes below Rs. 40 lakh) clearly leads the pack. It constitutes more than half (52%) of the overall new supply:

The chart below shows the share of newly-launched affordable housing units (< Rs. 40 lakh) during Q1- Q3 2017 across all the top cities.

Bangalore, MMR, NCR, and Pune are close together in terms of volumes, accounting for around 16 to 19% share of units in the sub-40 lakh price bucket.

In MMR, the new launch supply in this segment is led by the Ambernath,

by Anuj Puri

Anuj Puri, Chairman, ANAROCK Property Consultants

We keep hearing of the ‘wait-and-watch’ or ‘fence-sitting’ syndrome on the residential property market, which basically means that a significant number of people who want to buy a home are not doing so.

Property buyers tend to wait and watch rather than buy for two or three reasons. One would be that they are waiting for a ‘price correction’ – a meaningful reduction in the prices developers quote for their properties. Regardless of whether their hopes are realistic or not, this fence-sitting’ dynamic is a definitely a fact.

It is also frequently said that buyers may also be waiting for lower interest rates on home loans. This is only partly true.

While they certainly play a role in overall buyer sentiment, especially in the affordable housing segment, lower interest rates alone are not a sufficiently compelling rationale for aspiring mid-range housing buyers to abandon their ‘wait-and-watch’ mode.

If, however, the lower interest rates coincide with a hard discount or some other money-saving offer, many people will certainly come onto the market with a firm intention to finally buy a home.

by Prashant Thakur

Prashant Thakur, Head – Research, Anarock Property Consultants

When a location in Mumbai holds the three aces of accessibility, affordability and appreciation potential and completes its hand with good social infrastructure and workplace hub integration, it can justifiably lay claim the coveted property investment hotspot tag. Kanjurmarg can – and does…

Mumbai, the financial capital of India, is legendary for its massive employment opportunities, and as a result, the city’s population has been on a constant rise. Previously, the island city was the dominant hub of commercial and residential developments.

However, over the last few decades, rising property prices and saturation of the island city has pushed real estate developments towards the suburbs and further along the peripheral areas. The biggest advantage for the suburbs to evolve as key real estate destinations is excellent connectivity through the suburban railway network.

The Saga of Mumbai’s Suburbs

Real estate activity in the western suburbs has increased substantially in the recent decades due to the establishment of commercial office complexes in the Andheri-Goregaon-Malad belt. Enhanced connectivity via the Western Express highway helped in the region’s development as a key office market of the city.

by Anuj Puri

Anuj Puri, Chairman – ANAROCK Property Consultants

The year 2017 has not exactly lived up to the expectations of the residential property sector. RERA has been deployed, but as of today, only 18 states and 7 Union territories have notified RERA, while 10 states are yet to notify it.

While RERA has certainly already made its expected effects felt in states like Maharashtra – which includes very important markets like Mumbai and Pune – it has not yet extended its full influence over parts of the country where RERA it is probably needed the most.

Though Haryana and UP have notified RERA, they are yet to set up the portal via which developers can upload their applications for registration of their projects. The web portal is also critical for buyers, as this is where they can check the details of projects. Also, these two states have come under heavy criticism for diluting the Centre’s RERA norms.

Why 2017 Was The Year Of The Home Buyer In India

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

Property prices either stagnating or correcting:

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

Pune’s Hinjewadi: From Rural To Urban At The Speed Of IT

India Residential Property: A Recap Of 2017 And Glimpse Into 2018

Chembur’s Fascinating Real Estate Transformation

Affordable Housing In India: The Game Gets Real

Home Buying Tips: Examining the ‘Wait and Watch’ Syndrome

Kanjurmarg – Mumbai’s ‘Can-Do’ Property Hotspot

A 2017 Festive Season Primer For Homebuyers