Happy days for the Residential sector ahead says the experts

Happy days are here again says the experts of real estate. A recent report of JLL also says that the realty sector, this year is all set to grow at a greater pace. The majority of the experts of the industry and the trend watchers are of the opinion that the real estate industry of India is all set for a rapid spurt. The reasons of course are many.

It is no doubt that the last four years, post-recession was a turbulent time for the realty industry. There were major challenges not only for the industry to cope with but for the national economy as well. There were challenges like the soaring inflation, rising interest rates, buyers’ lack of interest and affordability, instable and lesser confidence in the government and other bottlenecks from the investment perspective.  All these taken together the realty industry was also in doldrums. But after the Modi government was sworn in and the new and optimistic promises of the government which also included few of the major ones in real estate added an extra impetus. They were like AMRUT, Housing for All by 2022, REIT, Smart Cities and others. There were promises of infrastructure development too some of which has already started to be constructed. The government did well in respect of bringing the Real Estate Regulatory Bill, relaxing the norms of foreign investment, relaxing tax norms and budgetary reforms. Along with these the RBI already brought the inflation rate under control and then came the successive reduction of the repo rates following which the banks also reduced the home loan interest rates. This spurted the assessment of affordability by the customers. Coupled with that the developers were already alluring the buyers with additional offers but in the last quarter we also witnessed many reducing prices straight away. This added to the increased spree of buying real estate in the major cities in the residential sector.

Another point that needs mention in this context is that 2015 witnessed a fair growth of the commercial and the office segment of real estate. The reason is the fair policies of the government regarding industry and its ability to pull MNCs and spur the growth of the startups. This led to the growth of the office segment and today we see the major markets like Bangalore real estate sector being on the top of the list of consumers of commercial space. There will be a great demand of Grade A commercial and office space says the statistics and the various measures. So on an overall basis the real estate sector is doing good and it has done pretty well in the office space absorption and the numbers say that it is the second highest after 2011. There will be more of demand of grade A office space in cities like NCR, Noida, Mumbai and other tier II cities also as predicted by the experts. The myth goes that for every 100 sq. ft. of office space absorption there is a derived demand of 600 sq. ft. of residential space. The experts say that this will be felt in the time to come.

The outlook

The experts suggest that the government’s efforts to streamline the overall conditions of the economy have paid off. It has initiated the industrial influx, evolution of the startups, and in the inflow of the
foreign investments has increased many folds.

Seeing all these indications the trend watchers and the economists say that the second half of the year 2016 will undoubtedly do much better. The demand of the residential sector will go up and the majority of the unsold stock that is lying in the major cities are expected to be sold out. The builders have already responded to it and have started reducing prices especially in the price sensitive affordable sector and the buyers have responded as well.  Going ahead the experts opine that hay days are ahead.