Will 2020 See the Revival of Real Estate in India?

2019 at best was a mixed year for the Indian Real Estate industry. While on one hand the impact of the ongoing NBFC crisis resulted in liquidity squeeze and 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 and the government's Rs 25,000 crore AIF provided relief to the housing sector. As per Anarock research, the housing sales value of India’s top 9 listed players touched Rs 108 billion in the second and third quarters of 2019, amounting to a 5% growth QoQ; however, some other big names were dragged into insolvency.

At the dawn of 2020, a question worth pondering over is - will 2020 be the year of renaissance for the Indian real estate industry? Veterans of the industry share their thoughts, as we attempt crystal-gazing.

"The Government is proactively pursuing growth and we believe 2020 would witness the early signs of revival and return of the sentiments," said Sanjay Dutt, MD & CEO, Tata Realty & Infrastructure Limited. He shared that Tata Realty would be commencing and adding 3.5 million sft in 2020. "2020 is expected to infuse growth in the sector. Like 2019, commercial office space will again lead, followed by retail and warehousing. On the other hand, the impetus given to the residential sector is expected to yield positive results," remarked Samantak Das, chief economist and ED- Research & REIS, JLL. He further expects that the special opportunity fund created by the government will help the completion of stalled projects, thereby improving the buyers’ sentiment. The partial credit guarantee scheme provided to NBFCs and HFCs will result in better liquidity and help in revival of the industry.

Talking about the Gurugram real estate market, Pankaj Bansal - director, M3M Group said that Gurugram is less affected by the slowdown as customers continue to make informed decisions, buying products of performing or reputed, new-age developers. "On average, presently, about a million square feet of inventory is sold in Gurugram on a monthly basis by such new-age developers. In 2020, this trend of consolidation of sales may translate further into the consolidation of business by such new-age developers," said Bansal. He added that steps recently taken by the government to resolve the liquidity crisis will facilitate economic growth, and overall the real estate industry should do better in 2020 than the year gone by. "We expect a series of real estate projects to be delivered in the coming year. The demand is expected to gain pace being propelled by affordability. Though overall demand is still weak, it is picking up in the affordable and mid segments - a trend that is expected to continue into 2020. Going forward, we foresee affordable housing to be the key driver of demand. We also expect time and price correction to take place which will increase affordability in most pockets,” said Ajay Gupta, director of Gurugram-based Corona Group.

It is widely expected that in 2020 the Indian real estate system will reap the benefits of structural economic policy reforms introduced with the intention of bringing financial discipline, accountability and transparency. According to Niranjan Hiranandani, national president - NAREDCO and MD Hiranandani Group, the muted investment and subdued consumption which reflect imbalanced demand-supply economics will start gaining momentum with sustained rehab of monetary and fiscal interventions to resurrect the sliding economic growth.  "With a number of initiatives and policies coming up, 2020 is expected to be the year of emerging micro-markets, with huge demand for quality homes along with the transparency in the real estate deals and improved accountability of builders," said Madhusudhan G, CMD of Sumadhura Group.

Going forward, said Ketan Musale, director - Dotom Realty, developers are expected to invest in the latest construction technology in the coming years to ensure timely completion of their projects that will meet international standards. "The focus for all developers and the community at large needs to be on project completion and timely delivery. It has become imperative for all developers to consolidate their project portfolios before eyeing further expansion,’’  said Khetsi Barot, director, The Guardians Real Estate Advisory, echoing the sentiments of Musale.

An industry report prepared by CREDAI & IBEF report states that the industry will reach $ 1 trillion by 2030 and contribute 13% of the country’s GDP by 2025. Moreover, the housing sector’s contribution to the GDP is expected to almost double to more than 11% by 2020. Hence, the real estate sector will be at the centre of rapid development and will further transform the economy.

 

 

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