Poor monsoon might not affect the real estate sector
The lack of rainfall has affected the farmers very badly; however the good news is that the realty sector in the country does not seem to be affected by the possibility of deficient rainfall this monsoon. India Inc. is hoping that the job market will kick off and an improved gross domestic product (GDP) will help the demands to soar up. It is expected that this mild negative sentiment will be mitigated by these improvements.
Aashiesh Agarwaal, Realty Analyst at Edelweiss Securities stated that the sector is still reeling under the impact of the slowdown. The overall sales volumes are low however in terms of construction execution the industry experts feel that they won’t see impact of a possible monsoon deficiency.
Agarwaal also mentioned that real estate is an urban phenomenon and the uptick in the job market will raise the sentiments. A weak monsoon mostly impacts the rural demand and rural spending power, and hence is not expected to affect the real estate industry in the cities as such. It is expected that there would be no material impact on the real estate sector considering the low base of poor volumes over the last two years.
Water is needed for construction material and the lack of it often results in construction delays for developers particularly in under-construction projects. The Mumbai Municipality already has announced for a cut in water volumes to the under construction sites, however the developers are making alternative arrangements to ensure that the progress is not stopped.
Irrespective of the monsoon phenomenon in the country, many developers such as Tata Housing are already engaged in incorporating water conservation technologies and innovations at the building design and construction stage by using water efficient construction materials.
Source- The Hindu Business Line
gross domestic product, Mumbai municipality, Real Estate Sector, under construction projects, urban phenomenon
