Chennai: Despite the subdued sentiments, the residential market has started looking up. While the industry is confident that sales will get back to pre-demonetisation levels, it is not sure about touching 2013 levels.
As per the data from JLL India, residential sales in the top seven cities have moved up to 1.15 lakh units in the first nine months of 2019 from 1.01 lakh units in the same period last year. Post demonetization, in the first nine months of 2017, sales had fallen to 72,300 units – a decline of 40 per cent from 1.19 lakh units in the previous year period.
According to Samantak Das, Chief Economist and Head of Research & REIS, JLL India, the first benchmark would be the pre-demonetisation levels, which is achievable for the industry. However, it will be difficult for the market to get back to 2013 levels when 1.48 lakh units were sold in the first nine months.
‘The 2013 level is the ultimate benchmark. But whether the industry will get back to those levels is a big question. The investor fraternity which was active in the real estate market till 2013 is not likely to come back. Till then, it was investor-driven sales an d now it is an end-user market. The industry as such will be in a better position in 2020,” said Das.
The disruptions in the market, including RERA, GST and the changes in the Benami Act, have almost settled down. “The real estate market has become more dependable. Further, the declining interest rates also have started manifesting positively, especially in the affordable and mid-segment residential units. Once the economy starts picking up, things will improve,’ he added.
Meanwhile, the government measures to boost the affordable segment sales are expected to support faster delivery of units. PropTiger estimates that nearly 4.5 lakh affordable homes will be delivered by 2020 in India’s 9 major cities.
Real estate developers have changed their approach amid changing market dynamics, showing a greater commitment towards project delivery than on new launches.
“The demand for affordable homes is expected to increase in the near future amid record low-interest rates and higher tax benefits. In the past, project delays have resulted in developers attracting negative publicity, which has dented the fortunes of many and left several others struggling for survival. A reset in this regard is absolutely necessary to bring back the missing trust factor among home buyers. Now that the government has announced last-mile funding for stuck projects through the launch of the Rs 20,000 crore stress fund, project delivery rates will hopefully improve further in the near future,” said DhruvAgarwala, Group CEO, Elara technologies, which owns PropTiger.
