Real estate: The economy has revived and Real Estate (Regulation and Development) Act, 2016 (RERA) has given the much needed boost to the sector, but there are lot of factors that need to be addressed to revive the sector.
Real estate market is gradually picking up pace key markets in terms of sales. Revival is visible on the back of price correction, Real Estate (Regulation and Development) Act, 2016 and recent amendments. Rajeev Bairathi, executive director and head, capital markets, Knight Frank India tells FEOnline that he is hoping for revival of the sector, but it will not come in a hurry. Below are excerpts from the interview:
Q. The year 2016 began on a positive note for the real estate sector with many experts predicting a revival in the sector. How do see the sector going forward?
A. The economy has revived and Real Estate (Regulation and Development) Act, 2016 (RERA) has given the much needed boost to the sector, but there are lot of factors that need to be addressed to revive the sector. We need to see if affordability has increased with GDP growth and translated into higher income affecting affordability and sales of projects.
Other factors that need to be resolved are sector linked — like project delays, promises not kept in terms of quality, litigation on key infrastructure issues like Dwarka expressway issue.
Q. When do you see the sector reviving?
A. This a capital-intensive industry and it takes time to revive. Since, the slowdown has taken time to come; it will take a few more quarters to see some green shoots in the sector.
However, selected markets have started to show recovery signs. Mumbai and Bengaluru where sales and launches were falling in past 2-3 years has been showing a turnaround in terms of sales and new launches. Hyderabad which is a micro-market has already started to do well two years back. The biggest market has been NCR which has not shown any sign of recovery.
Q. With prices falling, is it the best time for homebuyers to invest?
A. It is the best time for end-user as the realty markets in India has clearly bottomed-out. One should look at projects which are completed or near completion.
Q. Your final take on the sector
A. The section is in a corrective phase. It will take 5-6 years to weed out the poison from the real estate market related to non-serious developers, unfinished projects, high inventory levels and price rise. Developers have started to realise this that there is need to clean up the sector which is a good sign and first manifestation of the change happening. This is the first time since 2009 that sales have been more than the launches.