Housing sector witnessed quite a disruptive year that began with the aftershocks of demonetisation, followed by affordable housing being accorded infrastructure status, the Real Estate (Regulation and Development) Act, 2016 (Rera), goods and services tax (GST) on property transactions, resulting in dull sales during Diwali.
However, changes such as affordable housing and Rera have brought in more confidence for the buyers.
For example, at least in Maharashtra, around half of the apartments sold were registered under Maharashtra Real Estate Regulatory Authority (MahaRERA), showed a JLL India report. More importantly, smaller configurations were the preferred choice, which proves that affordable, and not luxury homes, are the flavour of the season.
Ramesh Nair, chief executive officer and country head, JLL India, said, "If anything, 2017 will go down in history as one of the most difficult years for residential real estate developers, who faced several challenges ranging from realigning their businesses to comply with the GST rollout to changing business models in the wake of Rera - and then, post-demonetisation, investors disappearing from the market. Though demand in end-user driven markets was not affected as much, the more speculative markets saw buying activity reduce to a trickle – more so in the luxury segment."
Pankaj Kapoor, founder and managing director, ?Liases Foras Real Estate Rating & Research shared that although there have been lesser project launches, year on year, the overall unsold stock in tier-I cities increased marginally.
According to data shared by Kapoor, Chennai witnessed a 20% increase in unsold inventory, which is the highest in Indian tier-I cities, followed by Kolkata at 13%, Mumbai Metropolitan Region (MMR) at 8% and Pune at 7%. Whereas, National Capital Region (NCR), Ahmedabad and Bengaluru saw a decline of 10%, 8% and 7%, respectively.
Anuj Puri, chairman of Anarock Property Consultants, concurs. "The presence of a significant inventory of unsold units kept a tight control on average prices, which largely remained range-bound between Q3 2016 and Q3 2017. Assessment of average prices for the past five years (Q3 2012 to Q3 2017) reveals that Pune, Kolkata, Hyderabad and Bengaluru were the front-runners in capital value appreciation, bucking the trends of larger cities such as MMR and NCR."
Rera was expected to bring consolidation in the sector but as it has been just around six months since the law was implemented, the housing market has not seen much consolidation, which is likely to happen in the coming year.
"The recent trend in the decline of new project launches implies that the supply in the market will gradually find some equilibrium with demand, and prices will subsequently start picking up the pace gradually. We certainly hope these factors lead to more fence-sitters spring into action in 2018," said Surendra Hiranandani, chairman and managing director of the House of Hiranandani.
On the outlook, Anshuman Magazine, chairman, India and South East Asia, CBRE said, "The impact of all these changes are already being felt across the country's economic landscape. As we move into 2018, we expect this positive momentum in the sector to continue. Investment inflows will increase, backed by increased regulation, ease of doing business and accountability for all stakeholders. For the sector specifically, the year ahead will be one where these reforms and policies will finally yield results."
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