Union Budget 2020- Real Estate Highlights

Feb 1,2020 / By Supriya Mogarala / No Comment

Real Estate Sector Highlights of Union Budget 2020:

Nirmala Sitharaman, Finance Minister of India has announced the Union Budget 2020-21. In the second term of the current government, this is the second budget. Fundamentals of the economy are strong enough to assure the stability of the micro-economic growth of the country. Banks had cleared up and recapitalized the accumulated loans of the past decade. Numerous steps have been taken on the formalization of the Indian economy.

Infrastructure:

Infrastructure was a principal focus for the Finance Minister as she presented her Budget speech. She made various important announcements on infrastructure like setting up 100 new airports for the UDAN scheme by 2024. The presence of an airport will enhance the city’s image as a business destination and will directly augment the scope of rental housing. She also announced that large solar plants would be set up on land owned by the Railways along the railway tracks. 148 km long Bengaluru Suburban transport project at a cost of 18600 crores, would have fares on the metro model. Central Government would provide 20% of equity and facilitate external assistance up to 60% of the project cost.

The government has proposed to provide about 1.70 lakh crore for transport Infrastructure in 2020-21. Proposal has been given to set up a project preparation facility for infrastructure projects.

The National Infrastructure Pipeline was launched on 31st December 2019 of ` 103 lakh crore. It consists of more than 6500 projects across sectors and are classified as per their size and stage of development. These new projects will include housing, safe drinking water, access to clean and affordable energy, healthcare for all, world-class educational institutes, modern railway stations, airports, bus terminals, metro and railway transportation, logistics and warehousing, irrigation projects, etc. The National Infrastructure Pipeline envisions improving the ease of living for each individual citizen in the country. It will also bring in generic and sectoral reforms in the development, operation, and maintenance of these infrastructure projects.

Accelerated development of highways will be undertaken. This will include the development of 2500 Km access control highways, 9000 Km of economic corridors, 2000 Km of coastal and land port roads and 2000 Km of strategic highways. The budget plan had also focused on the completion of the Delhi-Mumbai expressway by 2023 and the construction of the Chennai-Bengaluru Expressway would also be started.

FASTag mechanism encourages us towards greater commercialization of our highways so that NHAI can raise more resources. I propose to monetize at least twelve lots of highway bundles of over 6000 Km before 2024.

Affordable Housing:

In line with the government’s initiative “Housing for All” and Affordable Housing, it has been announced that the tax holiday is granted on the profits earned by developers on affordable projects approved by 31st March 2020. In order to ensure that more people will avail of this benefit, Sitharaman has proposed to extend the date of loan sanction for availing this additional deduction by one more year. The government also plans to extend the additional reduction of INR 1.5 lakhs for interest paid on home loans taken for the purchase of affordable housing by one year in order to boost the supply of affordable houses in the country. The interest deduction of up to INR 3.5 lakh for affordable housing priced below INR 45 lakh as against INR 2 lakh earlier for loans availed until March 31, 2021.

Personal income tax and changes in income tax slab:

In order to minimize the hardship in real estate transactions and provide relief to the middleclass taxpayers who are willing to let go of certain deductions can now make the switch to new rates. The new and simplified personal tax regime, wherein income tax rates will be significantly reduced for the individual taxpayers who refrain certain exemptions and deductions.

Taxable income slab	Existing rate	New rate
Rs 0-5 lakh	No tax	No tax
Rs 5-7.5 lakh	20%	10%
Rs 7.5-10 lakh	20%	15%
Rs 10-12.5 lakh	30%	20%
Rs 12.5-15 lakh	30%	25%
Rs 15 lakh and above	30%	30%

Making Indian real estate “green”:

Eco-friendly or green buildings segments have witnessed a huge growth in the Indian real estate segment. Reports suggest that the Indian green building market alone is poised to increase by 10 billion sq ft. by the year 2022, driven by factors such as increasing awareness level, environmental benefits, and government support.

Concession to real estate transactions and tax rates for co-operatives:

While taxing income from capital gains, business profits and additional sources in favor of transactions in real estate, if the consideration value is more than 5 percent by less than the circle rate then the difference is counted as income both in the hands of the purchaser and seller. In order to reduce hardship in real estate transactions and provide relief to the sector, FM proposed to increase the limit of 5% to 10%. Co-operative societies perform a remarkably significant role in our economy in promoting access to credit, procurement of inputs and marketing of products. These cooperatives are currently taxed at a rate of 30% with surcharge and Cess. FM proposed to present an option to cooperative societies to be taxed at 22% plus 10% surcharge and 4% Cess with no exemption/deductions.

Non-banking financial companies (NBFC’s):

To address the liquidity constraints of the NBFCs/HFCs, post the Union Budget 2019-20, the government formulated a Partial Credit Guarantee Scheme for the NBFCs. To further this support of providing liquidity, a mechanism would be devised. The Government will offer support by guaranteeing securities so floated. The government will allow NBFCs to extend invoice financing to MSMEs. The limit for Non-banking financial companies (NBFCs) under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002 to be eligible for debt recovery is proposed to be decreased from Rs 500 crore to asset size of Rs 100 crore or loan size from subsisting Rs 1 crore to Rs 50 lakh.

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Land Pooling Policy 2020

Jan 30,2020 / By Supriya Mogarala / No Comment

Land Pooling Policy (LPP)

Delhi Development Authority (DDA) has formulated a Master Plan 2021 for Delhi to improve city planning in the divided zones under the Land Pooling Policy (LPP). Land Pooling Policy is the consolidation of small land parcels to make them into one larger land for construction in order to accommodate the residential and commercial solutions to the people of Delhi NCR. Under the Land Pooling Policy of Master Plan Delhi-2021, the national capital region will begin the smart city plan.

Land Pooling Policy was announced by the urban development ministry in September 2013. The initial phase would see several landowners/developers/societies to pool their land and assign it to the government for developing a percentage of land and retain a percentage to build infrastructure. Delhi Development Authority and the developers would operate in partnership for the development of the LPP Zone.

As per the Master Plan Delhi-2021, 6 Zones amongst a total of 15 zones come under the Land Pooling Policy. These zones are J Zone of South Delhi, K Zone of South West Delhi, and L zone in West Delhi. These zones will attract population and thus the difficulty of housing solutions will be fixed under the LPP.

Land Pooling Policy has encouraged the development of the Indian real estate market and retaining hopes of the builders. Homebuyers can buy luxurious houses at affordable rates in all the prime localities of Delhi NCR. The cautious use of large land parcels will benefit the stakeholders. It’s more beneficial to invest in the LPP approved projects and experience living around robust infrastructure.

Key Amendments:

Timely development of infrastructure.
Enabling farmers to pay development charges.
Mandatory EWS housing units.
Full utilization of approved floor area ratio (FAR).
Urbanization of 20,000 hectares of land.
95 villages are coming together to develop.
Provision of 14-16 lakh housing units in Delhi.
48-60 percent of the land to be returned back to the owners.

Major benefits of Land Pooling Policy:

The archaic Land Acquisition Policy has been mastered by the LPP, thus promoting proper land-use and bringing out transparency in land management.
Better revenue for the landowners and the government.
Better living at affordable prices.
PPP Model has been introduced, and it is the first time the government sector is working with private entities to construct quality development in the prescribed zones.

Image Source: Quora

The dark red areas in the above map are the residential centers where the maximum population of Delhi resides. The red spots on the map imply that the residential centers of the city that are fully populated cannot accommodate any more residents on the currently available land. Delhi needs to expand to meet the needs of the migrant population which is expected to be 2.3 crores by 2021. The current infrastructure is only equipped to handle 1.5 crores of the 1.9 crore residents.

Distribution of land returned to DE (60%):

Gross residential – 53%
City-level (commercial) – 5%
City-level (public/ semi-public) -2%

Distribution of land returned to DE (48%):

Gross residential – 43%
City-level (commercial) – 3%
City-level (public/semi-public) – 2%

Which areas will come under the ambit of this policy?

To compensate for the 50-60k acres of land requirement in the upcoming years, areas like Narela, Najafgarh, and Bawana will witness land pooling and development. About 89 of the 95 villages have been listed as urban villages that will accommodate development. This system is a part of the master plan for Delhi-2021 according to which the city of Delhi will be developed.

The master plan has highlighted the following roles in infrastructure development for each:

DDA:

Time-bound development of Master Plan Roads.
Create a plan for physical infrastructures such as water supply, sewerage, drainage, provision of social infrastructure, and traffic and transportation infrastructure including metro corridors.
External development in a time-bound manner (external development charges and other development charges acquired for city infrastructure shall be payable by DE on the actual cost incurred by DDA)

Developer Entity (DE):

Approval of layout/ detailed plan from DDA
Demarcation of roads as per layout plan, sector plan, and obtain verification of the same from the concerned authority.
Develop sector/ internal roads/ infrastructure/ services in its share of land (which includes water, power supply lines, rainwater harvesting, STP/ WTP, etc.)
Timely completion of development and its maintenance with all facilities (open spaces, roads, and services till the area is handed over to the Municipal Corporation)

Special Provisions for the Economically Weaker Sections (EWS):

As per the master plan, the developer entity will assure sufficient provision of EWS and other housing as per the Shelter Policy of the Plan. Aside from this, the developer entity shall also declare the prescribed built-up spaces, EWS dwelling units, and LIG Housing components to the DDA as per the policy.

The EWS Housing unit size range within 32- 40 square meters.
50% of EWS housing stock to be maintained by DE for regulated sale for community service personnel and the remaining 50% to be sold to DDA, which will be improved as per CPWD index at the time of handing over.

Development Framework and Control Measures

The Government/ DDA will be answerable for creating and implementing a framework for Land Pooling Policy to:

Frame detailed regulations including process and a timeline for participation in a time-bound manner. The laws shall be put up in public domain for capturing views of all stakeholders by giving a 30-day time frame
Create a dedicated unit for dealing with approvals of Land Pooling applications
Create a Single Window Clearance wherein all the agencies accountable for giving time-bound clearances will meet regularly as per notified timelines.

DDA shall formulate the following norms pertaining to the policy:

The residential Floor Area Ratio (FAR) of 400 for group housing to be applicable on net residential land exclusive of 15 percent FAR reserved for Economically Weaker Section (EWS) housing. Net residential land to be a maximum of 55 percent of gross residential land.
This is explaining the concept of building higher to support more population
FAR for city-level commercial and city-level public/semi-public development to be 250.
Subdivision of residential areas and provision of facilities shall be as per MPD-2021.

How shortly will it be implemented?

Lieutenant Governor Anil Baijal has approved and notified DDA Land Pooling Policy, and the implementation is set to begin once proposals are built on the final draft.

Apart from this, the developers have already started pooling land and we can see housing units soon.

What’s in it for a Delhi resident?

Being a Delhi citizen, you can expect approximately 25 lakh housing units in the coming 10 years. That means cheap and affordable housing.

If you are not a Delhi Resident, you can still invest your money in the land pooling scheme so to be a part of one of the biggest real estate booms in India.

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Real Estate expectations from Union Budget 2020

Jan 29,2020 / By Hozefa Sanwari / No Comment

Union Budget 2020 Expectations

The Union Budget 2020 will be presented on 1st February by the Finance Minister, Nirmala Sitharaman. Given the policy reforms undertaken by the government over the past couple of years, the real estate industry is hopeful that the upcoming budget will provide the much-needed impetus. The year 2019 saw the government take numerous steps to help improve market sentiment and revive real estate demand. Reforms such as capital gain benefit, tax exemption on notional rent, incentivizing Affordable Housing, the revised rental income limit for TDS, and thrust on infrastructure growth were highlights of the Union Budget 2019.

This time around, the sector expects the Budget 2020 to lower the GST rates on under-construction projects, increase the NBFC credit liquidity, implement single-window clearances for project approvals, redefine the Affordable Housing price bracket, allocate additional funds for PMAY scheme, and fuel investment in infrastructure.

In this backdrop, Commonfloor conducted a real estate survey on builders across India to capture their expectations from the Budget 2020. More than 300 builders participated in this survey to express their views and expectations.

The majority of the builders (31%) expect the Budget to lower the GST on under-construction projects. GST reduction clubbed with the revival of Input Tax Credit can provide relief to the builders and housing can be made available at lower prices. After the reduction in GST rates in 2019, the government had withdrawn Input Tax Credit. The next key expectation of real estate is to address the challenge of NBFC (Non-banking Financial Company) liquidity. Liquidity will ensure positive momentum with a steady supply of ready-to-move homes. Also, single-window clearances can aid in procuring quick approvals so that project delays can be avoided. In the past few years, Affordable Housing has been the major growth driver. Still, it needs some reforms as currently only those houses are awarded affordable status and subsequently reduced GST rate of 1% which has a carpet area less than 60 sq.m. and falls under the price cap of Rs 45 lakh (GST rate for under-construction house is 5%)

Around 50% of the builders surveyed feel that the increase in Home Loan tax exemption is the primary factor boosting real estate demand. A further extension to the existing 2-lakh tax rebate on home loan interest rates will push the fence-sitters to buy homes. It could result in a higher demand for housing, especially in the affordable and mid-segment categories. Interestingly, “Redefinition of Affordable Housing” and “Income Tax Removal on Notional Rent” got equal responses from the builder community. The abolition of income tax on notional rent from the second self-occupied house benefits those with two houses and encourages home buying.

One-third of the builders surveyed feel that the GST rates are the most vital component hurting homebuyers’ sentiment. Apart from GST, project delays and high property prices are the other factors that affect consumer sentiments. Builders feel that the initial aid of Rs 25000 cr last-mile funding for stalled projects is insufficient for the realty sector and that it needs to be executed on a larger level on a priority basis. Moreover, home loan interest rates and high government taxes such as stamp duty and registration could be reduced to propel demand in the market.

Foreign Direct Investment is a key driver of economic growth and a medium of non-debt finance for any country’s economic development. One-fourth of the builders surveyed responded that single-window clearance will streamline the approval process and can bring about a major boom in FDIs for the realty sector. The next two major factors that can drive FDI are ‘clarity on entry-exit norms’ and ‘stamp duty exemption on FDI transfer’. More FDI in real estate will provide the necessary thrust to the current slump in the market.

Builder Bytes

Ajith Alex George, Director of 42 Estates says, “The real estate category in India requires bold fiscal measures from the union budget. The sector is going through a liquidity crisis with stalled projects across India, an economic booster required for the industry as a whole. Ease of Funding both on the supply and demand side along with quicker processing can again make this one of the key growth sectors. Approvals of projects have gotten better however there could be better clarity on some of the norms and changes in regulations, especially around taxation. Single-window clearance and query handling can make the process easier for the sector.

From the home buyers’ perspective, interest rates on home loans have to be reduced, we have been hearing further reduction on personal tax rates and stamp duties, this can strengthen the buying power of the home buyers which will have a compounding impact on the industry as both residential and commercial projects would get a better demand-side environment. The government is already doing its bit with the PMAY showing good traction, a further increase in subsidy rates for affordable housing can further help percolate this initiative. These steps might give the much-needed boost to the confidence of the developers and buyers alike.”

Mr. Amarjit Bakshi, CMD at Central Park says “Initiatives have already been taken to aid the real estate sector, such as tax concessions and availability of low-cost loans for developers and buyers. Reforms were put into place to promote rental housing as well as boost affordable housing, empowering the middle class and first-time home buyers.

We expect policy changes to boost consumption in the economy and improved liquidity for the industry by easing fund availability for the real estate sector, enabling the sector to come back on track, since it generates more than 6.5% of the GDP. It is expected that to boost investor interest, the limit of home loan interest will be increased. Announcing an industry status to the sector will bring manifold benefits.

Conclusion:

The implementation of the above-mentioned measures will help revive real estate growth to a great extent and give a thrust to home buying sentiments, which in turn will revive the economy. To generate cash flows for struggling builders, it is quite evident that the stress fund will be a big boost, but it would address only a small portion of the stalled projects. The rest could only be addressed by NBFCs and banks.

The real estate sector has long needed an industry status that can help to procure finances at a lower cost, especially now, when credit availability is a major headwind. The momentum of infrastructure development should continue from last year so that growth is decentralized and migration to urban centers remain under check. The real estate sector is optimistic that the upcoming budget will usher fresh stimulus in terms of bold fiscal measures to outperform its growth from last year.

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2020′s latest trends on Bathroom design.

Jan 22,2020 / By Supriya Mogarala / No Comment

Top Bathroom Ideas for 2020:

Just like every other part of the home, bathrooms are sensitive to fashion and design trends. The novelties in the washroom must be considered carefully because the investments in bathroom modification are more substantial and need some excellent ideas. Bathroom reconstruction or modification won’t be done so easily hence one must put a lot of thought and care when doing it. Once the concept of the bathroom modification is happening, the whole living space design arrangement must be considered and the entire style of the house must be done in a visual idea. There are a variety of bathroom design trends for minimalist bathroom designs for urban dwellings and the luxurious large houses with Jacuzzi, bathtubs, and large walks.

Freestanding bathtubs and sinks:

A bathroom classic will never go out of style and it is easy to see what kind of décor they match and if you want a modern look or something more classic according to the interior you choose. Though they might be expensive, bathtubs and sinks will increase the value of your home as well as will retain the value of your house.

Private vanity setup:

A practical choice in many bathrooms is two sinks are better than one. With a double vanity setup, two people can use the same bathroom without any disturbances as there will be ample space for both of them and their personal items. The important centerpiece, the mirror can be designed as you wish. It can be elegant or stylish as per your choice. This trend is important because it makes your vanity a primary focus and will provide the flexibility of how your items are placed in front of the mirror and sink.

Accent walls of bathroom:

An accent wall will never fail to provide a centralized look to your bathroom. You can highlight the bathtub or whatever to create a focal point for your vanity. An accent wall is a wall in your bathroom that is made from a different material and different color to contrast against the rest of your bathroom. Popular choices as per trend for this year are marble, brick, tiles, natural stone, wood, etc. you can choose the choice of your material and can paint it as per your choice and create the look accordingly.

Choices of bold colors:

Adding a striking look or creating vibrancy to your bathroom doesn’t always require new sinks or cabinets, sometimes you can just repaint your existing bathroom as per your choice. All the conventional interior colors like lime green, black, white can be used and one should make sure to choose more saturated spaces to paint and create more warmth and depth look to your bathroom.

Heated floor technology:

A very common problem for everyone with going into the bathroom at night is stepping on the cold floors, and the heated floor technology has been around in countries like Rome. This trend is now increasing in popularity due to advances in electrical heating technology. Heated floors are of two types, hydronic and electric. Hydronic is a merely updated version of roman technology which requires installing the entire house with a floor heating system with rubber tubes that circulate the heat from your water heater. The other type is called electric, which is a thin panel that is installed under the floor and is controlled by your thermostat and timer.

Inclusion of modern light fixtures:

It is an easy and cheap way to upgrade your bathroom by installing a small sconce anywhere near the mirror. It can greatly change the mood and lighting in your space. You can add small chandeliers or hanging bulbs where they can greatly amp up the mood desired. You can also make your own fixtures which will give you a much more personal style and add more vibrancy to your space.

Matte fixtures:

The demand for matte finished countertops, sinks, cabinets, bathtubs, ceilings are on the rise and it doesn’t seem to be diminishing anytime soon. With matte finishes, dust is not visible and the material is not easily absorptive. You can consider matte black if you want to give your bathroom a modern look that won’t be easily forgotten.

Hidden or enclosed toilets:

For those who prefer more privacy, hidden or enclosed toilets are those that are separated by either a small wall or a sliding door. You can get creative by choosing designs that are barren and you can get creative by making this small enclosure in your own room by changing the wallpaper and by adding more accents like light fixtures, creating a more personalized look for you. When you Look up and get lost. They’ve all been caught staring off into the sky when they watching the clouds move along. This dreamy cloud wallpaper design gives a constantly moving impression and features a beautiful hue of color set atop a neutral-colored backdrop. Suitable for any room for adults or kids. Different styles of cloud wallpaper use different cloud colors to create a modern look. The print design adds an artistic touch. This cloud print is truly unique. We have a wide range of popular cloud wallpaper suitable for different situations.

Water-efficient toilets:

With water usage being a huge concern for the environment, water-efficient toilets are on the rise. It is recommended to get a water-efficient toilet if you are installing a new toilet in the long run. It Will reduce the total amount of water used, which will greatly affect both your water usage and sewage bill through the years.

Energy-efficient bulbs:

A common trend now is using energy-efficient bulbs which will provide a different sort of brightness, but more importantly use about 80% less energy and will last twice as long. All the light fixtures will be fitted with energy-efficient bulbs which will definitely benefit the environment as well as your bill.

Adding plants:

A bathroom is an oppressive place and you can always give a green touch to make your washroom more appealing to make the area more vibrant and alive. You can actually grow many plants better in your bathroom due to the low light, warmth, and humidity that a typical bathroom has. So you can try adding some plants to your bathroom and add some air-purifying strength to your bathroom which can create a wonderful look for your washroom.

Sound system:

Music is always a good way of relaxation and reduces distress. Adding a few small speakers in your bathroom can create a calming and relaxing environment. There are waterproof speakers in the market for very affordable prices if you want to make your showers more relaxing.

Diverse tile textures:

A pretty common trend is diversifying your tile textures. Tile textures are those where you can create interesting patterns with your tiles that can feel more soothing to bare feet. You can also change the tiles in your shower or bath by giving your space a rustic feel depending on the colors you wish to incorporate.

Adding photo gallery:

It is a trend that not only can be done in your bathroom but also in your entire house. You can take a piece of art that you love and display it in the center of your bathroom. You can also paint on the wall of your bathroom.

While many of these trends are popular for seemingly good reasons, it’s by your standards that your bathroom should be designed. At the end of the day, it is always important to implement designs and styles that will make your bathroom more comfortable for you.

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Real Estate Round-up 2019: How India’s Real Estate Sector has Performed in Year 2019?

Jan 20,2020 / By Prahalad Singh / No Comment

Indian Real Estate 2019 Round Off

Real Estate is one of the key driving factors behind the growth of the Indian Economy and plays a pivotal role in the nation’s GDP growth. It is among the most recognized sectors globally. It creates millions of direct and indirect employment opportunities and supports the country’s development. It consists of 4 sub-sectors – Housing, Commercial, Retail, and Hospitality. The growth of this sector is well complemented by the growth of the corporate sector and the demand for office space as well as urban and semi-urban houses. The real estate sector of India ranks 3rd among the 14 major sectors that have a direct and indirect impact on all sectors of the economy.

The year 2019 has been a period of ups and downs for the Indian Real Estate Sector. There have been various policy and taxation related announcements in the last year. The market experienced the impact of the ongoing Non-Banking Financial Company (NBFC) crisis which resulted in a liquidity crisis and a slow pace of recovery in sales. On the other hand, the successful launch of India’s first Real Estate Investment Trust (REIT) opened new avenues for investments in real estate while multiple government SOPs provided much relief to the housing sector.

Post the policy reforms of 2017 such as demonetization, RERA, and GST, the residential market is absorbing the impact of these changes and is on the path to recovery. India continues to retain its position as the world’s fastest major growing economy on the back of improved investor confidence and better policy reforms.

The growth of the Indian Real Estate Market in 2019 has been driven by numerous factors including technology, improved ease of doing business, dust settling post the implementation of reforms such as GST and RERA, and demand-supply dynamics, among others.

It is also expected that the real estate sector will incur more and more NRI Investments in both the short and long term.

In the year 2019, the realty sector has experienced its highs and lows. Affordable Housing performed beyond expectations within the residential segment, while the luxury apartments continued to witness subdued sales. On the other hand, the commercial segment saw most of the investment flowing in as the year comes to an end. Whereas, other asset classes such as warehousing, Coworking, and Co-living gained momentum.

Initiatives are taken By The Government

If we look back at 2019, we can not deny that the government did not make sincere efforts to strengthen the sector. A series of reforms and policy changes were adopted. Some of them are:

Reducing GST rates to 1% for affordable homes and 5% for under-construction flats/apartments
The announcements about NHB raising liquidity to the housing finance companies
Relaxation of External Commercial Borrowing (ECB) funds
Creation of Alternative Investment Fund of Rs 25,000 crore for Stalled Housing Projects
Successive Repo Rate cut coming to 9-years low (total 135 basis points in 2019)
Tax holiday to first time home buyers
Relaxation in FDI norms for a single brand retail
The government slashed the corporate tax rate to 25.17% from 30% for existing companies, and to 15% from 25% for new manufacturing companies.
In 2019, consolidation continued in the residential segment. Those developers who are either on the verge of insolvency or have their project stalled continued to re-enter the market through joint development, or mergers.
Technological advancement in real estate too increased in the last year.

Post-2017 reforms such as Real Estate (Development & Regulation) Act (RERA), the inventory pile-up kept increasing across markets. New launches had taken a hit. Increasing unsold inventory became a cause of concern as liquidity challenges coupled with RERA deadlines made it tougher to deliver the project. In spite of the odds, those with deep pockets or leading names in the realty sector continued to outperform in 2019.

Since the start of this calendar year, there is a decrease in unsold inventory, which is a positive sign for the industry’s revival. In 2020, this is likely to reduce further to healthy levels. Another crucial factor for improved sales was largely stagnant property prices. Going forward, we may witness investors, funds, and lenders showing confidence to finance future projects. If employment levels improve and inflation kept under check, the revival of the sector isn’t distant. The year 2020 may well be the turnaround year.

Market Size

The real estate sector in India is expected to reach a market size of US$ 1 trillion by 2030 from US$ 120 billion in 2017 and contribute 13% of the country’s GDP by 2025. Retail, hospitality and commercial real estate are also growing significantly, providing the much-needed infrastructure for India’s growing needs.

Housing Sector

As per the CBRE report, it is expected that out of the 2.3 lakh new unit launches in 2019 in the top 7 cities, nearly 40% or approximately 92,000 units were in the affordable segment, followed by mid-segment with a 33% share. The luxury and ultra-luxury segments amounted to the least share with 10% (approximately 23,000 new units). Apart from that, Center Approves 3.31 Lakh More Houses Under PMAY(U) to fulfill the housing needs of the Urban poorer.

Housing sales in 2019 saw a modest 4-5% annual growth with over 2.58 lakh homes sold during the year.
New housing launches in 2019 saw an 18-20% annual growth with over 2.3 lakh units.

Commercial Sector

As per the CBRE report, office leasing increased by more than 30% annually to cross 47 million sq.ft. during the first three quarters of 2019, exceeding its previous high of 2018. The leasing exercise reached about 15.4 million sq.ft. during Q3 2019, rising by nearly 23% on an annual basis.

Commercial office space continued to be the most sought-after asset class.

Forecast

Since the start of the year 2020, there is a drop in unsold inventory, which is a positive sign for the industry’s recovery. And it will probably see a growing trend in 2020. We expect the hurdles in the real estate sector to get resolved. Stagnant property prices was another factor for improved sales. Going ahead, we may clearly see investors, funds, and lending houses showing confidence to finance future projects. If employment levels improve and inflation remained under control, the recovery of the sector is not very far.

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Category : Real Estate