Update on real estate India

It wasn’t that the demand for realty died down. It only remained dormant; this was more an upshot of the subprime crisis bubble in the US. People were scared invest given the tightening of funds, general uncertainty in their earnings and savings and all that. This had a rippling effect with reactions like check on prices, sluggish construction pace and nationwide lukewarm sentiment on real estate prices.

Things are now looking up. There was this apartment in my flats that had gone down from 90 lakhs to 67 lakhs during the last six months and the neighbouring house owner now quotes 80 lakhs for the same floor plan. I’m trying to say that there has been a price correction in the last one month. The builders are now more confident of delivering on time. I read this in an article in Deccan Chronicle, Aliens Group managing director Hari Challa says and I quote, “We assure that we will complete Aliens space station-1 by September, 2011, which was clearly mentioned in the agreement copy. Work has been going on in full swing as we have already sold 75 per cent of flats". I checked up on their site and progress and the customers now seemed happy.

There is lot more stability in things even in general.

The pent up demand that was there in the market has started getting converted into business and people have started buying, yes, the pace could be better than this, but the buying is happening.

There have been stimulus packages, there is some good work on ensured availability of liquidity to the home buyers, interest rates have softened and this has generated a positive air and demand in the market. The cut in housing loan lending rates may attract a few more buyers into the market.

Interest subsidies and extension of tax holidays for projects that will get completed by 2011 has brought about positivity in the micromarkets. This has encouraged developers to take up new projects and expedite ongoing projects. This builder (my friend has bought a flat there) whose construction work was going on at a sluggish pace has picked up speed and the works seems to progress in full swing.

Real Estate in India

Post deregulation and liberalization, real estate in India has seen a rapid expansion. Burgeoning middle class and growing demand, the super strong demographic impetus, revised investor friendly policies, huge quantum of FDIs, rural exodus and urbanization, expansion of real estate in terms of becoming a more structured and organized sector have all enthroned real estate sector in India. The new stand adopted by Indian government regarding foreign direct investment (FDI) policies has encouraged many countries to invest in India. India has displaced US as the second-most favored destination for FDI in the world.
Not only is real estate one of most crucial economy driver, it is the second largest employer after agriculture in India. With the conducive real estate environment (residential, retail and commercial) in metros of India such as Mumbai, Delhi & NCR, Kolkata and Chennai, Hyderabad etc and in tier two cities, the foundation for real estate looks strong.
More and more real estate biggies cashed on to this sentiment and built luxury homes. Ultra-luxurious and grandiloquent! Golden Gate Properties, EMAAR MGF, Mantri, Unitech, DLF, all of them competed to dole out homes more pompous than the other.
Then..
Market slump crippled real estate sector. It bore the cardinal shift from being a seller’s market to buyer’s. It reached the point of abyss when builders had to put their projects on hold. It could only look up from there!
Today, the sentiment is more positive, you can see that in the faces of builders, in the smiles of the sales guys and investors. Major projects have taken off, regulatory bottlenecks have been cleared, the construction is picking momentum and the future bodes well.
Another cardinal shift has been the shift from luxury housing to affordable segment. Taking lessons from the mercurial dynamics of housing from the slump and the disastrous fall of its sibling elsewhere, real estate in India realized that chanting the budget housing mantra is the order of the day.
DLF and Omaxe have started the trend and announced their long term investment plans in affordable housing and others are catching up fast.
That’s the market scene in Indian real estate at a bird’s view glance.
Each post in this blog will analyze the Indian real estate sector, major players, latest developments, technologies and beyond.