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.

Anuj Puri, Chairman – ANAROCK Property Consultants Pvt. Ltd.

Real estate development remains a highly lucrative business line, which is why most builders retain skin in the game even in the face of strong market headwinds.

However, real estate development also remains a highly capital intensive business, and among the many new market truths that RERA has brought to the fore, the fact that only well-capitalized players will endure going forward stands out.

The ‘time-honoured’ practice of raising funds from the market via ‘pre-launches’ has now become untenable.