Property market expectations in 2013
Considering that 2012 has not been a rosy one for real estate sector in India, developers and analysts have pinned their hope on 2013 to be a better year for the sector. Real estate has suffered in the past year owing to sluggish demand, high property price and project delays. The year 2013 brings in lot of expectations along the line of realty growth and government initiatives and reviving economy to bolster the development of the sector.
Here are the factors that are expected to assist the real estate in India.
Infrastructure development
Various development projects are being taken up across the country, which are expected to offer the much needed push to the struggling realty sector. Metro projects in different cities such as Mumbai and Bangalore comprise of the biggest infrastructure projects in the country. India is to invest an amount of Rs. 2,00,000 crore in metro rail projects over the next 10 years. Upcoming metro rail networks in Greater Noida, North West Bangalore and Chennai will positively influence the residential realty sector in these cities. The ambitious metro project in Bangalore is worth amount Rs. 6000 crore and the services have started in 2011. The upcoming metro routes are set to enhance the connectivity among different areas in the city and with the enhanced connectivity, realty growth will also speed up.
FDI in retail
The government of India spread out the welcome carpet to Walmart & Co. in 2012. However, the government allowing foreign direct investment (FDI) in Indian retail industry will take some time to reap in dividends for India. 2012 is expected to witness positive market sentiment and foreign funds start landing on Indian shores. The boost in multi-brand retail sector will see positive impact on residential sector and set to benefit both developers and consumers.
RBI initiatives
Real estate firms have been cash trapped for long and developers have maintained that stringent lending norms have made it difficult for cash flows to come in. The alternative borrowing channels do not seem to be working too much in favour of developers and the dip in sales due to astronomical property prices in India is making the situation more critical. The developers expect initiatives taken on part of Reserve Bank of India (RBI) to cut down the interest rates in 2013. Confederation of Real Estate Developers’ Association of India (CREDAI) has asked for RBI initiatives to ease the ongoing liquidity crisis in the real estate sector. Analysts are of the opinion that RBI is showing the signs cutting down the home loan interest rates further so that the unsold inventory can be sold off.
Initiatives by Government of India
The government of India (GOI)’s agencies have tried to introduce necessary measures to bring in much talked about transparency in the real estate industry. Steps like Competition Commission of India’s (CCI) removing the abusive and dominant provisions in the agreement between apartment buyers and a major realtor marks a good beginning. It sends off the signal that the atmosphere is congenial for consumers and track is set for a model builder-buyer agreement across the country.
Issues related to land acquisition and the fate of proposed Land Acquisition Bill would be crucial in the current year. While developers would like the bill to be a developers friendly one, contentious issues have to be dealt with delicately by the government. Granting industry status to the realty sector is another key area the developers will be looking out for.
Expected highlight areas in 2013
(i) Affordable housing has to be given impetus through government taking measures like extended borrowing from foreign sources in case of low income segment.
(ii) Real estate regulatory bill to be finalised upon in the current year.
(iii) Single window clearance system for real estate projects has been proposed so that project delays can be dealt with.
(iv) Infrastructure facilities in urban areas have to be boosted with special assistance of public private partnerships.
(v) Special housing policy to bridge the gap between demand and supply of housing units in the country.
(vi) Price correction is desired across housing segments after the urges of government of India and CREDAI to sell the large unsold inventory at discounted price.
