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Indian Real Estate Poised to Grow in FY 2019-20

Saturday, June 01, 2019

By Vivek Kumar
International Business Head, 360 Realtors

Indian Real Estate suffered from subdued demand in FY 2016-2018, as the industry was plagued by high inventory & limited demand. Policy overhauls such as RERA & demonetization further softened the demand for housing. However, in FY 2018-2019, the markets started to revive again as transaction volume started to pick up in most of the major markets. The revival in the market was backed by stabilization in regulatory policies, increased optimism, the surge in transparency & decent economic outlook.

In FY 2019-2020, as per the research by 360 Realtors, the uptrend will further continue. The industry will continue to capitalize on attractive prices, the rise of organization in the realty markets & numerous attractive schemes offered by developers to lure buyers. Not to forget, the fact that the recent thumping victory by the Modi government will also infuse confidence in the market. After the overwhelming victory in the center, the government is expected to continue deploying more reforms & policy makeovers, thereby adding vigor & transparency in the industry.

Prices are expected to remain stable: As per the research by 360 Realtors, property prices will remain stable for next 6-8 months with limited scope for any further easing out in prices. A stable price will further invite end users & investors to enter the space, thereby helping in faster turnaround of the existing inventories. Although the market will be primarily driven by end users, the investor activity will also pick up at a moderate pace. It is estimated that near around 15-20% of the market will be run by investors.

Certain Pockets will show vigorous growth: Although as an aggregate, the market will showcase stable prices, certain pockets across India will show vigorous growth. The upward spiral in prices will be driven by the rise in employment opportunities & infrastructure developments. In Delhi NCR, micro markets like Dwarka Expressway (Gurgaon) & Noida Expressway (Noida) will see a decent hike in property prices. In Mumbai region, Western & Central suburbs along with Navi Mumbai are expected to show steady performance on the back of end user & investor involvement.

In Southern cities, micro-markets closer to IT/ ITeS hubs will demonstrate positive momentum in Prices. IT/ ITeS & manufacturing industries will continue to feed in more demand in the western & eastern corridors of Pune, thereby ensuring a rise in average property prices.

NRIs will pivot in big numbers: Over the years, NRIs have consolidated a stronghold in the industry. In the present scenario, near around one-fifth of the market is dominated by NRIs from GCC, Asia Pacific, North America & European countries.

As Modi government has come back to power, it is expected that NRI investments will further get a shot in the arm.

Advisories will gain momentum: Indian Real Estate transaction space is dominated by numerous channels such as direct selling, online platforms & individual brokers. When it comes to organized advisories such as 360 Realtors, Square Yards, Anarock etc, the market is still relatively small at around 7-8% in major cities.
However, it is one of the fastest growing segments in the industry & is expected to double itself in the next 3-4 years. Such modern advisories are becoming very popular as they have a unique business model. They handhold home buyers throughout the property purchase cycle & help them buy the right property. Their services also continue in the post-purchase phases by helping home buyers with all the documentation & legal procedures. Interestingly, they do not charge anything from buyers & make commissions only from the developers. Such a model is becoming hit not only in the metros but also in tier 2 towns of the country.

In a nutshell, FY 2019-2020 will be the year, the industry has been waiting for long. The market will further bottom out, witness more consolidation & show positivity. After a period of 6-8 months, it is highly likely that property prices in general will start moving upward.

The Writer is a International Business Head of 360 Realtors

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