Every year, the end of August ushers in the beginning of festive season in India.
Religious sentiments lead innumerable Indians to plan important purchases and investments – including real estate – during this period.
Naturally, developers also plan for these months well ahead of their arrival with a view to cash in on this positive sentiment.
Unfortunately, last year’s festive season did not meet their expectations as buyers stayed away from the market – primarily due to execution delays, an uncertain economic scenario and unattractively high prices.
Demonetization also played a key part in the depressed sentiment – not only in the resale market as was at first expected, but in primary sales as well.
Most aspiring home buyers deferred their purchase decisions, preferring to wait until RERA kicked in fully. Though most developers offered compelling discounts and schemes, buyers stuck to their cautious approach during the last festive season.
However, the 2017 festive season has started on an altogether different and far more positive note.
While structural reforms by ways of RERA and GST have helped firm up buyer sentiment,
After recognizing a massive gap of housing in India, the Union government had announced ‘Housing for All’ by 2022 in July 2015 to achieve the staggering target of bridging a gap of more 1.9 crore houses. 96% out of these are required for the Lower Income Groups (LIG) and Economically Weaker Sections (EWS) groups.
In India, while the population is growing at more than 2.1% every year and may touch 1.51 billion by 2030, growth in housing has been unable to keep the same pace. The Central and States governments are now contemplating many ways and means to provide access to housing for all.
Affordable housing will not only fill the housing gap but be the next major economic growth driver by creating more than 2 million jobs during the period till 2022. To fill the massive gap of affordable housing in India, the government has come up with a spate of many initiatives:
To encourage the PPP (Public Private Partnerships) module which can amplify affordable housing, the Union Budget 2016-17 announced that developers would be exempt from paying tax on profits in this segment for five years starting 2016
The Government has increased the time limit to complete affordable housing projects from 3 to 5 years.
Over the last few years, there have been continuous incidents of collapsing old constructions in India.
As per data shared by the National Crime Record Bureau (NCRB), more than 14,000 people have died from 2010 to 2015 due to dilapidated building collapses. At an average, 2,700 people lose their lives in different structural breakdowns every year.
Across all the major cities in India, Mumbai has been witnessing the maximum cases of structural collapses. Between 2010 to 2015, there have been approximately 13,470 incidents of structural collapse in the country, and Mumbai alone accounted for 1,366 of these.
This amounts to over 10% of the total incidents. The collapse of buildings, specifically old constructions, has been continuously increasing in recent years.
The life span of any building depends on many factors, including quality of building materials, external weather conditions, structural design and age of the structure. However, we have seen in the recent past that many collapses happened due to the negligence of residents living in these old constructions.
Most of the times, these old buildings are left dilapidated and never refurbished,
ANAROCK Property Consultants Acquires LJ Hooker’s Indian Operations – Redwoods
Strategic acquisition to boost ANAROCK’s capability in integrated real estate solutions, dedicated design center in Bangalore
Bangalore, August 30, 2017 – Consistent with its focus on becoming India’s leading residential real estate solutions company, ANAROCK Property Consultants Pvt. Ltd. has announced the acquisition of Redwoods, the Indian arm of LJ Hooker, based out of Bangalore. The acquisition was closed today, with ANAROCK absorbing all Redwoods employees.
Anuj Puri, Chairman – ANAROCK Property Consultants says, “The acquisition of LJ Hooker’s Redwoods is in line to our overall business strategy and will help us augment our operations across key southern markets. It will give us unparalleled competitive advantage in offering customized real estate solutions. With its strong presence and unique multi-pronged approach, ANAROCK is decoding unmatched value for both B2B and B2C clients.”
The eastern corridor of Mumbai – especially the suburbs from Ghatkopar to Mulund and Thane – has been witnessing a major transformation over recent years.
From being a largely industrial belt to developing into a hub for malls and premium residential towers replete with the latest amenities, the area has undergone a tremendous transformation.
Infrastructure projects have always had several positive implications for Mumbai’s real estate market, and what these suburbs are witnessing now is predominantly the impact of a significantly improved infrastructure scenario.
Proximity to the de-facto CBD of Mumbai, i.e. the Bandra-Kurla Complex (BKC), and connectivity to it via the Eastern Express Highway are now major advantages.
LBS Marg is another road through this part of the city which is now a destination of many office, retail and residential developments.
To reach the central business district, residents can get onto the Eastern Freeway and save many precious man-hours annually. The Eastern suburbs now also benefit from proximity and good connectivity to the emerging business district of Navi Mumbai.
Powai is another very important residential-commercial hub of Mumbai,
In Indian real estate today, the untrained eye may see a dichotomy in the massive investments pouring into the Indian residential sector and the actual on-ground demand for housing.
A similar question mark was, in the past, also attached to the fact that developers kept churning out projects despite the visibly reduced uptake over the last couple of years. The fact is, there are always at least two storylines unfolding – the first and most obvious is the short-term story.
Currently, residential demand is still subdued due to the uncertainty brought on by many regulatory upheavals – all of which were necessary to make Indian real estate a better marketplace.
To begin with, the Government’s unexpected demonetization move late last year put a severe dampener on the resale market and also impacted the primary market to some extent.
Even as the markets were recovering, RERA and GST – both of which were predicted and expected –
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.
The repo rate has been reduced by 25 bps to 6.0 per cent, reflecting the slightly accommodative stance that the Monetary Policy Committee has taken as it agreed that headline inflation has come down significantly.
While many inflation upside risks have not manifested themselves as yet, the MPC feels that inflation may trend upwards going forward based on farm loan waivers, states passing on increased salaries / allowances and expected pressures on food inflation. The RBI remains more committed to keeping inflationary pressures under check.
With the revival in Indian residential real estate well underway, it is pertinent to turn our attention to which formats have been in high demand at every given juncture.
Such awareness is primarily useful from an investor’s point of view, but anyone who tracks Indian real estate out of purely academic interest cannot fail to be interested, either.
The Value Chain
Despite a lot of ambiguity attached to the term, affordable housing rules the roost today.
With the Government having a taken a sharp-focus policy approach to boosting this segment and employment market opening up once again, mass-housing makes more sense today than ever before.
Mid-income housing, which comprises of the 2/3BHK formats in not-so-remote locations, is also seeing a pickup in interest from buyers, with ready-to-move options in RERA-compliant projects by reputed developers selling well.
Luxury housing was one of the major losers after the demonetization move and has now taken an extreme back seat. However, there is one niche segment which still holds its own to a great extent.