Whenever you see someone in the first week of January, you normally wish a happy new year in exchange of pleasantries. But what will happen to the real estate sector of India? Is it really happy for the realtors and the stake holder of the huge realty industry of India? Many says yes to it and others are a bit skeptical but they still are hopeful that 2016 will be much better than 2015. Does that mean that we are saying that 2015 was a bad year for the realty industry? The market trend watchers and the statics from the different global consultants like the Cushman and Wakefield, JLL and others say that it was mixed bag consisting of both positive and negative trends. Let us talk about the positive trends that were shown in the latter half of the year. The positive part was that the customers those were sitting on the fence waiting for green signals in the market finally got the impetus to buy and in the latter half of the year, the buyers were more.
There were of course initiatives from the builders and the developers who were starving for liquidity to sell. In that spree the developers flaunted many offers and offered discounts and freebies that actually did not work so much. The trend watchers say that consecutive reduction of the bank repo rates and successive rate of reduction of the housing loans have been instrumental in increasing the demand of the buyers and the end users. On the investment front the entity level investment was much more and the total investment surpassed the level of 2014 by 74 percent. But the private equity investment was not so much as per the statistics. But from all these the trend watchers maintain the view that the investors have also increased and the latter half of 2015 also witnessed an increased investor confidence. The sales were more and this made the old piled up stock of the last three years being sold out. There are more than 7 lakh units still unsold in the nation in the major markets of India. This figure is likely to be much more if the count is taken in the whole of the nation. One more observation that was of the market watchers were that the new launches came down drastically in the year 2015 and that is the reason that the stocks are coming down.
The future - 2016
Coming to the year 2016 the realtors hope that with the relaxed norms of the foreign direct investment (FDI) there is a hope of renewed interest in the foreign investors and the institutional investors too. There is another hope of foreign players like the developers of China to come to India and invest with the local mega players. This is a great hope for the sector as the realty industry is starving for liquidity and that is especially true for the affordable sector.
The next reason for being more optimistic in the year 2016 is that the government schemes like the 100 smart cities, more infrastructures in the urban and rural areas, Atal Mission for Rejuvenation and Urban Transformation (AMRUT) and few such measures will trigger the investment, employment and deployment of resources in the industry.
Another good sign that was noted in the year 2015 was there was a much more demand of all time high in the five years of commercial real estate. The myth and the calculation goes in the industry that for each 100 sq. ft. of commercial space there is a requirement of 600 sq. ft. of residential space. In that context the realtors hope that although the picture of the housing sector in the year 2015 was bleak but due to the absorption of office and commercial spaces it can be predicted that the demand of residential units will pick up too in the next five years in the four metros and the major markets of India.
So looking at all these and the government spearheading the realty missions the overall picture of the year 2016 seems to be brighter.
