An Insight into What 2020 Holds for Indian Real Estate

By : 360 Realtors

17 March, 2020

In the wake of the economic slowdown in 2019, Real Estate markets across India have experienced challenges in the form of suppressed demand & investment, a large accumulation of unsold inventory & liquidity crunch. Sentiments in the housing industry have further declined as the GDP growth has slowed to 4.5% which has been a major dampener. Although the government has proactively taken bold steps to restore traction in the market in the form of introduction of an Alternate Investment Fund (AIF), repo rate cuts and reduction in corporate tax, it will take some time for these measures to have the desired effect.

The year 2020 will be a continuation of the previous year with the market continuing to bottom out with the help of end-user demand. Although ideal growth dynamics are yet to emerge in the market, the overall fundamentals look healthy backed by a large aggregate population, rapid rate of urbanization & growth in the middle class. The fact that the Indian Real Estate market has shown a certain degree of stability is also evident by renewed optimism among the developers who have been adapting to the transparency brought about by the introduction of RERA and GST and they are gradually stepping up supply in order to meet this renewed demand.

Analysis by 360 Realtors has shown there will be incremental growth in new launches in 2020. There will be ample takers in the market for the right ticket sizes, as the market fundamentals will be run mostly by end-users. Average prices in most of the markets will either remain stable or dip down marginally.

The market outlook for 2020 looks promising backed by huge underlying aggregate demand, growth in the middle class population & relentless investments into infrastructure development. Despite high unsold inventories delineating the markets, transaction volumes are also picking up. In major markets like Mumbai Metropolitan Region (MMR), the current inventory is more than 250,000 units. At the current level of transactions, it will take around 14.3 quarters for the inventories to completely get sold off. In Delhi-NCR, the inventory is around 150,000 units & at the current rate, it will take around 11.4 quarters to achieve a complete turnaround.

In the southern cities such as Bangalore & Hyderabad, the market is moving ahead in a streamlined fashion due to strong optimism emerging on the back of a robust IT/ITeS industry. Data collected has revealed that Quarter to Sales (QTS) is relatively smaller in such markets – Bangalore (9.3 Quarters) & Hyderabad (8 Quarters).

To get more insights on the expected market trends, click on the link below to read our Indian Residential Real Estate Market Outlook 2020 report.