1. Builders pinning hopes on rate cuts for revival in 2017

Builders pinning hopes on rate cuts for revival in 2017

The realty space remained weak even this year as housing sales fell on low demand and adverse impact of junking of old cash, but developers expect recovery from the second half of 2017.

By: | New Delhi | Published: December 29, 2016 2:20 PM
Market, economy, demonetisation, builders, buildings, interest rates, new delhi, building project The realty space remained weak even this year as housing sales fell on low demand and adverse impact of junking of old cash, but developers expect recovery from the second half of 2017. (Representative Image: Reuters)

Property market was the economy’s underbelly this year and demonetisation towards the fag end only made it more isolated. But things might change in 2017 as builders are pinning their hopes on lower interest rate and transparency for the sector to come back to life.

The realty space remained weak even this year as housing sales fell on low demand and adverse impact of junking of old cash, but developers expect recovery from the second half of 2017.

The multi-year slowdown, however, did not deter investment as cash-starved developers raised Rs 48,300 crore in 2016 from private equity (PE) investors to fund their projects, up 53 per cent from last year’s, according to property consultant Cushman & Wakefield.

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“Housing sales were better this year before note ban. But sales have slowed in the last two months. We feel that 2017 will be a golden year for the developers in the primary market as they will benefit from the government’s demonetisation move and a likely fall in interest rates on home loans,” realtors’ apex body CREDAI President Getamber Anand told PTI.

DLF’s CEO Rajeev Talwar said: “There has been a lot of cleansing in the real estate sector this year. So, 2017 will be a good year for primary product suppliers of real estate.”

He said housing prices would remain stable in the primary market, but decline in the secondary (resale) one.

Housing sales did rise in the first three quarters of 2016 on positives like tax sops in the budget, new real estate regulatory law and easing of interest rate by about 1 per cent, but transactions dried up post demonetisation, dragging the overall numbers down for 2016.

According to property consultant JLL India, housing sales in primary market stood at 1.2 lakh units in the seven cities during January-September 2016 as against 1.19 lakh in the year-ago period. Total units sold in 2015 were 1,57,800.

“2016 overall was a watershed year for Indian real estate, with RERA (real estate regulation Act), demonetisation and the Benami Properties Act impacting sentiment negatively. The momentum in 2016 housing sales was lower than 2015 and 2014. Prices remained stable,” JLL India Chairman and Country Head Anuj Puri told PTI.

However, he exuded confidence in a market revival in 2017.

“In 2017, we will see consolidation within this industry, with financially disciplined developers having focus on buyers and delivery of projects doing well and the others falling by the wayside. In housing, we will see confidence coming back among buyers with implementation of RERA,” he added.

Demonetisation, coupled with the introduction of the real estate regulation Act, could create significant short-term uncertainty, Godrej Properties MD and CEO Pirojsha Godrej said, but added that same factors will lead to consolidation and improved governance in the sector, which in turn will drive consumer confidence.

“2017 will be a transition year where the realty sector starts the year with relatively soft demand, but ends the year very strongly as the benefits of lower interest rates, better affordability and far improved governance lead to a significant surge in demand,” he said further.

  1. G
    gopal
    Dec 29, 2016 at 12:41 pm
    Builders just understand.. DO not live in fools paradise. Demand will be there in the next decade only for low cost housing..transparency is a must and multiple launches forget it. By chosing property as an investment avenue, many Indians and NRIs have burnt their hands badly and banks are stuck with NPAs.Indian Cities are not Manhattan as claimed by many builders.dian cities are cities with limited infrastructure and facilities.. Better sense prevail and work for the housing for the affordable cl. Less Margin and High Volumes only will sustain
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