Spurred by the Modi government's various policy initiatives and taxation reforms, the nation's real estate sector has finally started showing signs of revival.
Spurred by the Modi government’s various policy initiatives and taxation reforms, the nation’s real estate sector – facing headwinds for quite some time — has finally started showing signs of revival.
According to a recent report by ANAROCK Property Consultants, for instance, new housing launches have recorded a whopping 50% jump in Q2 of 2018 over the preceding quarter, while housing sales across the top seven cities of India rose by 24% during the same period compared to those in Q1 of 2018, indicating that home buyers are coming back to the market. The contribution of the National Capital Region (NCR) in the new supply was around 17% with 8,500 units, an 89% rise over the previous quarter, while the Mumbai Metropolitan Region (MMR) saw the maximum supply with nearly 13,600 units in the second quarter of 2018.
Industry experts say that having adjusted to various reforms like GST and RERA, many metro cities in India are now witnessing recovery with sales improving, while property prices have either corrected or have maintained status-quo.
“Residential sales velocity across segments has witnessed mixed trend in recent times. While luxury segment is yet to pick up, there have been signs of recovery across mid and affordable housing segments. Affordable segment, specifically, has been the mainstay of demand of late as the government has been pushing affordable housing through various schemes and incentives. Lower home loan interest rates combined with government impetus to affordable housing have played a key role in pushing sales in this segment,” says Ravi Ahuja, Senior Executive Director, Mumbai & Developer Services at Colliers International India.
Another factor has been the growing confidence of home buyers in recent months, boosted by policy reforms. “The confidence of home buyers has got a boost, backed by policy and structural reforms – such as GST and RERA – by the government. With the advent of RERA, for instance, developers have shifted their focus to completing their existing projects rather than just launching the new ones, in order to avoid penalties. This, in turn, has increased project deliveries and also the confidence of buyers,” says Ashok Gupta, MD, Ajnara India Ltd.
Witnessing positive sentiments in the market, developers have also become active. Dhruv Agarwala, Group CEO, Housing.com, Makaan.com & PropTiger.com, says, “April–June 2018 has proved out to be a decent quarter for the real sector sector. During this period itself, the residential sales in Noida and Greater Noida have increased by 51% to 5,715 units — numbers revealing that the market is changing for good. Not just this, around 400,000 units are likely to be delivered later this calender year, out of which nearly 40,000 units are expected to be delivered in Noida Extension alone.”
“Both mid and affordable housing segments, including ready-to-move-in properties being out of the GST ambit, are registering improvement in sales. Policy reforms like RERA, which have enhanced transparency among buyers and developers – have helped increase the deliveries in H1CY 18 and are likely to further boost consumer sentiment, which has been on the rise over the past couple of quarters,” says Dhiraj Jain, Director, Mahagun Group.
However, industry experts say that while developers are still getting their strategies accustomed to become RERA-compliant, positive outlook in a pre-election year may demand further changes to make policies home-buyer friendly. “Post-election, we expect to see a stable government that proves to roll out policies favouring the growth in real estate, that in turn favours the developers and end-users,” says Ahuja.
Growth in real estate, in fact, happens to be a catalyst in GDP growth of the country as it also aids the growth of other industries, including cement and steel. Additionally, construction and real estate is the second largest employment generation sector, after agriculture. The government’s initiative of ‘Make in India’ campaign is expected to create numerous jobs in the country.
“The government should develop user-friendly policies, which in turn are expected to bring about a significant increase in per capita income and disposable income, thus enabling home buyers with increased purchasing power parity. The residential sales velocity should improve going forward based on the favourable changes in government policies,” informs Ahuja.