The Finance Minister’s fifth union budget on 1st February 2018 was probably one of the most closely-followed events for the Indian business community.
Not only was it the final budget before the 2019 general elections, but strong rumours of a populist Budget were sending all sorts of mixed signals to various industries.
In any case, all sectors – and specifically real estate – had harboured considerable hopes from this Budget. Battered and bruised after demonetization, RERA and GST, the sector looked forward to at least some major announcements that could re-inject the market into a growth trajectory.
Above all, real estate players fervently hoped for the long-awaited and long-elusive infrastructure status. The logistics sector and affordable housing had received it sometime back, but the market needs the benefits of infrastructure status on a much broader spectrum.
Expectations notwithstanding, the real estate industry got neither infrastructure status or, for that matter, any additional direct policy push from Union Budget 2018-19.
Why is infrastructure status so important for any sector?
How can this status impact the country’s economy at large?
18% of MMR’s Housing Launches In 2017 Added In Thane – ANAROCK Report
53% of 70,000 units launched between 2012-2017 already absorbed
Mumbai, 8th February 2018: ANAROCK Property Consultants‘ latest research report ‘Thane – An Emerging Megapolis‘ highlights this city’s unstoppable rise to become one of the hottest real estate development and investment destinations in the Mumbai Metropolitan Region.
Launched at the MCHI CREDAI Thane Property Expo today, the data-driven report vouchsafes that Thane, driven by specific micro-markets, has not only shed its previous ‘industrial’ image but become a stand-alone real estate boom city.
“Thane’s emergence as a preferred destination for corporate office occupiers as well as homebuyers has been nothing short of spectacular, ” said Anuj Puri, Chairman – ANAROCK Property Consultants at the report’s unveiling. “Last year alone, the city contributed as much as 18% of the entire supply of housing project launches in MMR. Even more interestingly, of the 70,000 housing units that hit the Thane market in the last five years,
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.
Vartak Nagar is a residential suburb in Thane once known largely for its tapered roads and deplorable infrastructure. The residential market was predominantly defined by low-rise developments that housed industrial workers from the nearby manufacturing units.
Today, with the rapid urbanization of Thane and its surrounding precincts, Vartak Nagar has witnessed a significant upgrade in terms of both civic and social infrastructure, and its revamped market profiling has turned it into a promising real estate destination in the Mumbai Metropolitan Region (MMR).
It now has excellent road connectivity to the central and western suburbs via the Eastern Expressway and Western Express highway (via Ghodbunder road) respectively. Vartak Nagar is also well-connected through an established rail network.
Its proximity to the serene Upvan lake and exquisite view of the scenic Yeoor hills have become the major drivers of consistent real estate growth in Vartak Nagar.
Moreover, it still has an abundant supply of land parcels (primarily through the redevelopment model) available at competitive prices. This is a major draw for developers of residential projects since the lower land prices allow them to sell their properties at attractive rates.
Pune, known as an education hub and a prominent location for manufacturing industries, has evolved as an information technology hub during the last few decades.
Spread across 244 sq. km. and with a population of over 3 million, the city has rapidly transformed from a pensioner’s paradise to a bustling economic centre of India.
Well-connected to Mumbai – the financial capital of India – Pune is also well-networked to other major cities across the country, as well as the world.
In terms of Gross Domestic Product (GDP), Pune is ranked 6th in the top 10 wealthiest cities in India and the second-highest in Maharashtra (after Mumbai) in terms of GDP contribution.
The major sectors contributing to the city’s growing economy include manufacturing, education, tourism, and culture. The Mercer 2017 Quality of Living Rankings evaluated living conditions in more than 440 cities across the world and ranked Pune at 145 – second in India after Hyderabad, which ranked 144.
As per the same ranking, Pune featured among evolving business centres and nine emerging cities around the world,
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.
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.
Pune, once known as a ‘pensioners paradise’, has transformed significantly over the past few years.
The booming IT/ITeS and manufacturing sectors led to a rapid makeover of the city, and working professionals from all parts of the country started flocking to Pune. The concentric development pattern of the city helped expansion in the suburbs and peripheral regions.
Undri and Ambegaon, located in South Pune, are in the process of becoming Pune’s next vibrant property boom areas over the next few years. More and more of Pune’s homebuyers now seek out residential destinations which still offer the unspoiled natural splendour and healthy environment which Pune was once famous for.
Such areas are increasingly hard to find in the face of the rampant real estate construction drive all over the city. The availability of large, contiguous land parcels for development in Undri and Ambegaon is another big advantage for the area, which for this reason lends itself particularly well to sizeable township projects.
This region’s history as far as real estate development is concerned is not very long.
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.
Once a small village located on the eastern periphery of Pune and defined by industrial developments, Wagholi has now transformed into a sought-after residential destination.
The housing boom in Wagholi kicked off primarily on account of vast availability of land parcels at affordable prices, low registration costs and easy legal procedures, as it falls under a Gram Panchayat area. Wagholi and its nearby areas have also witnessed a rapid growth of IT parks and other commercial centres.
Over a decade ago, Wagholi was seen as little more than an extension of the city. However, it has interesting historical antecedents – Wagholi was the centre of the ruling chiefs of Chhatrapati Shivaji, and it’s very ancient Wagheshar (lord of tigers) temple is a popular tourist attraction.
Located on the Pune-Nagar highway, Wagholi has been under transformation since 2007. The region began developing primarily due to the saturation of core areas in Pune. In addition, the advent of the IT-ITeS industry in the eastern parts of the city drove up real estate activity here.
The major growth drivers that contributed to the development of Wagholi include the presence of affordable projects,