Rituraj Baruah | 20 Mar, 2018
consecutive years of slump and low demand in the real estate sector,
market participants believe 2018 will be a year of revival as the
sector has finally shed the impact of demonetisation, Goods and
Services Tax (GST) and the implementation of the Real Estate
Regulatory Act (RERA).
Business stakeholders say the
government could do its bit to push the real estate sector forward by
giving it an industry or infrastructure status, which would help
lower the cost of funds for developers and reduce prices for
Although demand is not bullish, the sector is
rising from its trough, with unsold inventory slowly finding
consumers, they say.
"Earlier there were around
600,000 units unsold. Now that's down to about 450,000 units in the
country," said Narasimha Jayakumar, Chief Business Officer at
99acres.com , a property advisory website.
quite optimistic about the whole sector in the next 12 months. I
think it's going to increase...it's going to grow," Jayakumar
Amit Modi, Vice President, Credai Western Uttar
Pradesh, said: "In 2017-2018, according to reports from markets
such as Mumbai, Delhi and Bengaluru, there is an increment of 30 per
cent in sales compared with 2016-2017." Credai is the apex body
representing real estate developers.
Modi, who is also the
Director of the real estate company ABA Corp, said there are
instances of rise in prices.
"In one of my projects,
which is in the premium segment, we started selling at Rs 3,500-Rs
4,000 per square foot four years back, but (now) the price in our
project is more than Rs 6,500 per square foot. In some units we have
touched the price of Rs 7,000," he added.
search for properties are also on the rise, said Jayakumar. "There
are several examples we are seeing... there is 50 per cent growth in
searches. There has been a 45-50 per cent growth in queries for
buying," he said.
However, although searches and
research regarding properties have risen from September onwards, the
process of concluding a sale was still slow, said Jayashree Kurup,
Head of Content and Advice at magicbricks.com .
January this year, the market was fairly active from the end-user
side before a marginal slowdown in mid-February," Kurup told
"In the last two-three weeks we have seen an
uptick again and I think it is a very slow and steady
Talking about the demand for apartments, the
stakeholders said the trend is changing from buying by investors to
end-users. "Investors used to earlier buy 50-60 per cent, that
number is now down to 8-10 per cent," Jayakumar said.
many cases the difference between the rent and EMI (equated monthly
installment) is only 15-20 per cent, particularly with the
credit-linked subsidy scheme, depending on the prices of property and
the loan tenure, making it very attractive for the youth to buy,"
Real estate players felt, apart from the market
dynamics, the sector is also seeing structural changes and
consolidation among small players, largely after the implementation
of the RERA and its mandate to establish state units.
the introduction of RERA disturbed the status quo in the market,
which was largely unorganised and unregulated, its proper and
complete implementation would clear up the sector of unscrupulous
players and bring about confidence among buyers, they
Stakeholders, however, expressed concern about not
getting industry status for the sector.
status means that you can get access to lower-cost bank financing.
You don't have to go to an NBFC (non-banking financial company),
other private financing or private equity, which are much more
expensive," Jayakumar said.
Modi emphasised that to
reach the target of housing for all, industry status was
"(With industry status) the sector will be
more organised, one window clearance will be there, and cheap finance
will be there, which will definitely stabilise this business and also
fulfil the Prime Minister's dream of housing for all by 2022,"
Although the government provided the industry or
infrastructure status to affordable housing projects in Budget
2017-18, it does not seem to be budging on the demand of real estate
players for the status to be extended to the whole real estate
Going ahead in the year, the market players also
believe the rental housing policy will play a significant role in the
The policy, which is currently at consultation
stage and will be sent for cabinet approval after due diligence, is
aimed at alleviating the housing shortage in urban areas by
encouraging renting of homes.