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.
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.
ANAROCK Launches Report On Affordable Housing In NCR
Supply-absorption break-up of units priced < INR 20 lakh & between INR 20-40 lakh
Key hotspots, supply as per completion timelines
Delhi, 14 December 2017: ANAROCK Property Consultants today released its definitive research report ‘NCR – An Affordable Housing Goldmine’ at the Delhi leg of Economic Times’ ACETECH – Asia’s leading trade fair for architecture, building materials, innovation and design.
The report pitches the phenomenal expansion and urbanization rate of India’s largest planned region against the real estate industry’s affordable housing response. Intensely data-driven, this study lays bare the opportunities, shortcomings and challenges that Delhi-NCR presents to the real estate sector.
Anuj Puri, Chairman – ANAROCK Property Consultants says, “Affordable housing has once again taken centre-stage in all real estate forum discussion, and deservedly has the undivided attention of all industry stakeholders including developers, investors, customers and the Government. As India’s largest urban agglomeration, Delhi-NCR is extremely important from every perspective –
The Indian real estate sector evokes a lot of interest from NRI investors.
This interest is driven by long-term fundamentals such as emotional connect, safeguarding retirement plans, better returns and yield on investments, and depreciation in the rupee’s value.
While there are around 30 million NRIs across different countries, investment into Indian real estate is led by NRIs from UAE, USA and Saudi Arabia.
From 2000 to 2014, NRI investments in Indian real estate reached substantial levels ranging between 10-18% annually. However, when the residential market began to slow down in 2015, the NRI investment fervour into this asset class began to cool off a bit.
To top it off, there was a slew of reforms and policy changes such as demonetization, RERA and GST, the combined effect of these being a decrease in NRIs’ investment in the sector.
The highest impact was in the residential real estate market – which, for a long time, was the primary focus of NRI investors with their interest skewing towards apartments and villas, followed by plots and other property typologies.
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,
At a time when technology is disrupting different industries across the world, the consumer-facing property brokerage industry cannot be far behind.
Real estate was among the first marketplaces in India to attract and justify professional brokerage services, and took off in earnest on the back of increasing need to connect renters and homebuyers with relevant suppliers.
Today, the real estate brokerage industry is on its next leg of evolution, leveraging technology as a competitive advantage. Indeed, technology is rapidly becoming the key differentiator for real estate consultants across market segments, especially the residential sector.
Getting ‘real’ – virtually
Let’s take a rather obvious example – that of ‘virtual tours’. Via this tech-enabled medium, real estate consultancies help prospective buyers, renters and investors to visually navigate the interiors of various properties on their computers or smartphones.
True, Indian residential property continues to be a ‘touch-and-feel’ marketplace in which personal site visits are more or less de rigueur.
However, providing customers with a virtual tour of various options,
NCR has witnessed a 3 to 5% decrease in average per-square-foot property prices over the last one year (Q4 2016 – Q3 2017).
See chart below:
Currently, NCR has the maximum number of unsold units among all the top cities in India. An approximate 2 lakh unsold units are stocked up across different cities in the region. Greater Noida has maximum share of unsold inventory, followed by Gurugram.
There are many reasons for the price decrease in NCR. To begin with, excessive delay in project construction and possession has hurt buyers’ sentiments and led to subdued demand. Also, many projects have been stalled due to agitations and litigation issues.
The massive unsold inventory itself has acted as a sentiment suppressant – and finally, while demonetisation, RERA, and GST are potentially positive moves for the industry, they have played a significant role in reduced buyer sentiment, contributing to the price falls.
Prices are likely to remain stagnant for a few more quarters. Factors such as the huge unsold inventory,
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,
India has registered a historic improvement in latest ranking for Doing Business, released on 31st October by the World Bank.
In fact, it is one of the top ten improvers for the current year assessment, thanks to the implementation of key reforms pertinent to 8 out of the 10 indicators that World Bank factors in for this index.
With the overall ranking of India in the Ease of Doing Business jumping from the 130th to the 100th place compared to previous assessment, India is the only large country displaying such a significant improvement. How has real estate performed in this improvement? Actually, it’s a bit of a mixed bag.
India’s ranking for Dealing with Construction Permits has improved from 185 to 181, for Resolving Insolvency the improvement has been from 136 to 103, and for Paying Taxes from 172 to 119. However, on the parameter of Registering Property, it slipped 16 places from 138 to 154th.
The key reasons for the lower ranking in for this vital criterion when compared to other counties are the continuing multitude of procedures to follow and therefore more time developers have to spend in pursuing them.