With economy witnessing a downturn, interest rates and inflation reaching all-time highs, 2013 has been one of the most eventful years for Real Estate in India. While introduction of Real estate regulatory bill and land acquisitions bills in the parliament was positive for the real estate industry, end users sitting on the fence expecting a fall in prices lead to a contraction of demand in the past few quarters. This year Mumbai, Kolkatta and other key markets saw less activation from real estate players as delay in approval process impacted project launches.
The market has turned from sellers to buyers in 2013 with attractive offers from various developers across the range of projects. The Indian economy is recovering and real estate sector is expected to stabilize in the next two to three quarters. We would anticipate this sector to grow, albeit at a slightly lower pace, as the demand for housing still appears to exceed supply, and the weakening rupee makes India an attractive real estate investment destination for non-resident Indians. We expect the market to start an upward momentum by end of 2014 and suggest end users and investors to utilize this opportunity to book their dream homes as these offers would vanish once the economy starts showing signs of recovery.
Stability in property prices during 2013 will give the required confidence to consumers who have been delaying their decision to book their dream homes in 2014. We believe that affordable and low-housing segment is likely to see the highest growth but other segments will also grow as people aspire for better homes, better quality of life and hence invest more in buying their own homes. On the other hand, the demand for luxury housing in India will continue to growing due to influx of global lifestyle trends along with changing lifestyle and aspirations seen amongst young India. The demand for luxury homes has been increasing from cities such as Bangalore, Delhi, Chennai, Kolkata, Mumbai and others.
The key reasons responsible for the growth seen in the real estate industry in India include liberalization of Government policies. Furthermore, FDI in multi brand retail will also give a push to the growth in the real estate sector. It will trigger the opportunities for retailers thus leading to an increase in demand for real estate. Ancillary and service industries such as IT/ITes, manufacturing industries which are being set up in tier 2 and tier 3 cities also play an important role for rise in property demand.
As the recession market, we need to concentrate on execution as that would help in building the credibility and that’s the opportunity the branded players can built up. Going forward the key to real estate growth would be to get infrastructure status with relevant subsidy for affordable housing, subsidy on technology enhancement so that less dependent on manual labour, curb on raw material cost as that will impact the quality and timeline. Finally the interest rate to be reduced so as to make it attractive enough for buyers