Indian Real Estate Sector is Poised For Recovery

November 07, 2017 admin News

The Indian real estate sector, which had been facing tough times, is now poised for recovery due to the introduction of new government policies. The implementation of a number of reforms in the sector including demonetisation, RERA, GST, home loan rate cut, and affordable housing has breathed life into the real estate industry.                                                                         
In the last 14 years, the real estate sector has seen a number of ups and downs. From 2003-2008, the sector saw a boom period with property prices rising. The period between 2008-2010 saw a slowdown in the real estate sector arising from the global economic crash. From 2010-2014, there has been an increase in supply due to a number of new launches. This period saw an increase in property prices once again. The last three to four years have again witnessed a dip in the sector, with sales slowing down to half, and the amount of unsold inventory increasing.

During the last few years, the real estate sector saw a huge slump due to delays in project deliveries, low quality of projects, etc. and the home buyers became increasingly unhappy with the developers.

The implementation of demonetisaton brought investor confidence back in the market. Over 51000 new projects were launched in the first quarter of 2017, due to an improved sentiment in the market.

However, post the implementation of RERA, the number of new launches crashed to just 31,000 in the second quarter, with more builders focussing on completing ongoing projects and timely delivery. The sector is expected to see a decrease in the number of new launches in the third as well as the fourth quarter of 2017 as well.

The implementation of the new reforms by the Indian government is reviving the sector. Home buying is again on the rebound as consumers are getting the promised quality and are able to pay in white post demonetisation. Developers are also now adhering to the timeline. The sales in July-September quarter are expected to remain at similar levels of Q1, while sales in Mumbai and Pune are expected to increase.

The Oct-Dec 2017 quarter, which is the festive season, will see consumers coming back in droves into the “buy” market. Over 60,000 and 70,000 homes are expected to be purchased in this quarter, which will come down slightly in the last fiscal quarter to 55,000 to 65,000 levels.

In the first quarter of the fiscal year 2018-2019, the real estate sector may see 65,000-75,000 units being sold each quarter. The sales in the sector are expected to hit a seven-year low of 2.1 lakh numbers in FY17, and remain at the same level in FY18, before bouncing back in FY 2019 to the 3 lakh range.

The number of consumers waiting to buy their dream home is expected to increase in 2019, with the Indian government introducing new reforms to bring the GDP growth back on track over the next few months.

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