GREAT EXPECTATIONS – Winds of Change Warm Realty Cockles

PM Modi’s focus on `Homes for all’ will be a major boost for the realty sector in 2015.

The winds of change, promised by Prime Minister Narendra Modi in his slogan of “achhe din“ (good times), are now blowing more perceptibly.

Inflation, including the house price component, has now been reduced to the lowest level in memory. Property buyers are back in force in most cities as inquiries have rebounded.

“The real estate sector saw considerable slowdown in the last couple of years. However, in the second half of 2014, both residential and commercial segment saw considerable improvement, led by positive consumer and business sentiments. These sentiments are expected to strengthen in 2015, led by a recovery in GDP growth and decline in inflation rate. The marginal growth of the sector (2-3%) seen since 2012 may rebound in 2015,“ Neeraj Bansal, head of (Real Estate and Construction) of KPMG in India, said.

Year 2015, in fact, is likely to see home-buyers benefiting from reduced borrowing rates, increased developer-focus on affordable homes, largely stable prices, and better job prospects. Rupesh Gupta, director of JM Housing, says: “Year 2015 is round the corner and it is going to be a great one for the real estate sector. Prime Minister Narendra Modi is focused on `Homes for all’, which will be a major boost for the realty sector in 2015. India will see increased economic growth and the removal of barriers to FDI, which will spur demand for infrastructure construction as well. We are also expecting the RBI to oblige with rate cuts, which would create better environment for investment.”

In the last few years, cost of construction, land prices and other related costs have gone up considerably. So price appreciation remained constrained below optimal levels in 2014.

“From the second quarter of 2015 onwards, there will be a trend reversal, making room for better price appreciation in the primary seven cities. Appreciation will be highest for projects in which unit prices range from Rs 3,500 to Rs 7,500 per sq ft–up to a maximum ticket size of Rs 2.50 crore, where double digit appreciation in terms of percentage growth will be evident,“ Om Ahuja of JLL India said.

Industry experts are hopeful that the Real Estate Regulatory Bill will finally come through in 2015. As this bill will help consolidate the sector by bringing developers without credibility and good track record on the regulatory radar.

Source: Times Property, Dec 27, 2014

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