Real estate sector: Growth starting, but no bull-run yet

Jan 04 2014, 11:21 IST
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High prices led to low sales and real estate developers had piles of unsold inventory and lack of liquidity.  (Thinkstock photo) High prices led to low sales and real estate developers had piles of unsold inventory and lack of liquidity. (Thinkstock photo)
SummaryThe real estate industry is anticipating relief in in Budget 2014-15, post elections.

limited new projects are being launched. Capital values across most micro markets in almost all the major cities will remain stable even though the transaction volume will remain a constraint.”

“Overall, residential markets are expected to witness stable capital values except for those projects which are over-leveraged and are unable to attract sales,” says Sanjay Dutt, Executive MD, South Asia, Cushman and Wakefield, a real estate consultancy. “Due to on-going infrastructure developments such as metro rail, mono rail and roads in Mumbai, NCR, Chennai, Bangalore etc, select locations here may witness healthy business activity,” adds Durtt.

According to Puri, redevelopment would be a growth driver in many metros and newer verticals such as rental housing, affordable housing and senior living would show increased activity.

Developers' take

Developers expect the government to take a supportive approach towards the sector. “The government should plan to reduce the housing shortage and encourage rental housing besides enacting the proposed bills,” says Sunil Mantri, president, National Real Estate Development Council (Naredco). “We expect the government to implement single-window and on-line approval system besides support in dealing with acute skill shortage,” adds Mantri.

“The year 2013 has been the worst in terms of growth, sales and governance (approval process). However, the first three weeks in December have shown better sales than the previous month. This is an indication of the realisation that costs have gone very high thereby there is a very little possibility to reduce sale price,” says Lalit Kumar Jain, chairman, Confederation of Real Estate Developers’ Associations of India (CREDAI). “This with the pent up demand will result in better performance in the coming year. Political uncertainty is already discounted by the market but if there is a stable government post elections, then there is all the possibility of market getting into a very vibrant and upbeat mood,” adds Jain.

End users

Currently, investors and end-users are fence-sitters. Analysts are of the view that post elections, end-users with adequate funds will begin picking up the right sized and rightly priced properties. This absorption will lead to demand surpassing supply and in turn prices would see a rise in several selected locations.

The positive impact of the new policies and reforms will translate in to better and bigger fund-flow in second half of the year, keeping prices buoyant. The expansion of manufacturing and services in Tier-II and Tier-III cities will result in greater demand. “Residential capital value will increase

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