Bizbuzz reached out a
cross section of the realty industry to find out their take on the state of the
business. Here are the responses:
Prime locations will see decongestion, says Abhinav
Joshi, Head of Research for CBRE India.
1.
How
was the year gone by for the real estate/infra industry – in terms of sales and
new project launches. Can you please list a few launches and the category of
projects – luxury, affordable etc., - and the locations?
With the impact of the policy initiative
subsidizing in 2018, supply and demand for the year was inching upwards with a
y-o-y increase of about 15 % (supply) and 13 % (demand). In fact, 2018 saw
demand to be marginally stronger than the new supply additions which indicates
the revival of this segment. While the recovery was at site, the year witnessed
crisis of Non-Banking Financial Company (NBFC) sector a main source of funding
for residential developers, resulting in fund crunch for the developers. Over
the years, affordable and mid end segment were contributing to about 80 % of
the supply and demand. However, the share of affordable segment in terms of
supply/demand has been increasing backed by government initiatives and strong
end user demand.
2. Do
you appreciate the point that infrastructure development is important for the
growth of realty? What according to you are key infra issues that weigh the
customer’s mind while looking for a house?
Robust infrastructure plays a major role in determining the real
estate investment. Hence, property prices close to infrastructure such as
roads, railway stations and airports are significantly higher than in other
areas and buyers are are ready to pay for the privilege of living close to
these conveniences, as it saves them both commuting time and expenses. From a real estate
market perspective, infrastructure implies both physical infrastructure such as
road connectivity and also social infrastructure like schools, hospitals,
shopping malls, post offices and other essential government services, and
facilities of leisure activity such as sports complexes, swimming pools, parks
and gardens, etc.
3. The government has initiated several
infra projects such as metro, coastal road and BVSL. Do you agree that these
will help create a positive sentiment for realty industry?
The slew of various infrastructure projects
will improve connectivity and decongest the prime locations of the city. It
will also significantly impact the property prices in the vicinity besides
giving a fillip to the demand for commercial and office spaces in the area.
Thus, these infrastructural developments can be a game-changer for the realty
industry.
4. Specifically speaking, please mention the area
wise - impact of the following:
a. Mumbai Metro
projects
b. Coastal Road
c. Bandra
Versova Sea Link
a) Mumbai metro project will be a game-changer
for the city. Not only will it improve connectivity, reduce travel time and
transportation cost, it will also impact the real estate sector in a
significant way. It will impact the capital values of residential localities in
the proximity, along with the increase in demand for offices and retail spaces.
b) The coastal road will be a step forward in
ushering an integrated transport system which will ultimately benefit the
public-transport system. It would ease connectivity across the city by serving
as a ring road. However, environmental impact of this project should be
thoroughly evaluated before it.
c) The new corridor is posed to disrupt the entire Mumbai real
estate market as it would be a shot in the arm for connectivity between
the suburbs and the main commercial business district. It will reduce
travelling time to 12 minutes from 60 minutes. Due to improved
connectivity from the farther suburb, the crowded areas of Andheri, Chembur,
Ville Parle are expected to be decongested and the excessive pressure on the
express highways would be relieved.
5.Do you expect the prices to go up in the next
three to five years? If yes, by how many percentage points?
Asset pricing to remain steady albeit key
locations: Pricing will be one of the key factors for the projects to be
successful. With limited speculative buying, developers will be cautious with
pricing resulting in stable capital values in 2019. However, ad demand
increases, the locations with basic physical and social infrastructure is
expected to witness higher appreciation in next 3-5 years.
6.Has the industry seen any correction in last
couple of years? If yes, by how much?
Over the last two years, the policy disruptions reduced the
number of launches and developers were focusing on realigning their business
models and clearing their unsold inventories. The developers were also offering
discounts and subvention scheme for prospective years.
7.Has RERA helped in bringing about or improving
transparency?
The implementation of RERA has ushered in a
regime of transparency and accountability and weaned away fly-by the night
developers to a great extent. Currently 28 states and union territories have
notified rules under RERA and 15 of these have established a permanent
regulator, the latest one being Delhi, which appointed a full-time regulator in
November. As of November, more than 34,000 projects had been registered under
RERA.
The year 2018 has been a positive year for
real estate as the market started reviving from the short-term disruption
caused by introduction of key policy reforms such as RERA, GST and
demonetization introduced in 2017.
8.Do you feel this is the right time to buy?
The Indian real estate sector is undergoing
recalibration post one year after the implementation of key policy reforms. The
implementation of RERA has reduced fear of project details and the unified tax
regime under GST has weaned away uncertainty and led to positive investor
sentiment. This is thus an opportune time, especially for NRIs, to
purchase property back home.
9. One
line on how do you of the New Year will pan out for realty/infra industries
since the construction industry contributes handsomely to the GDP?
Propelled by strong market indicators such as
India’s robust growth rate of 7.4 percent (according to IMF forecast) and a
positive investor sentiment, we foresee the real estate sector to sustain the
momentum in the forthcoming year with the commercial space being the key driver
of demand led by BFSI (Banking, financial services), manufacturing and other sectors.
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