Roadmap for realty run in New Year

Ravi Sinha

Research to define demand

Developers are left with no choice but to get into serious research vis-à-vis the demand in the given market. Only right property, in the right market, and at the right price point would sell. One can even sell luxury housing in Tier-II cities, if the developer knows his audience, their purchase parity and customizes his offerings. 

Affordable luxury

Affordable luxury, a very relative concept, would be the market driver in the year ahead. In some of the non-descript markets with over-supply of mass housing, the projects that are selling are the ones where the developer has tried to add aspirational elements to the otherwise affordable projects, since affordable segment is extremely competitive today due to over-supply.   

Smaller projects

The developers are today left with no choice but to go for smaller projects, or to split the large projects into phases. This would not only save them from RERA penalties, but would also take care of cash flows and course correction, if needed. Developers would avoid inventory overhang in the year ahead.

Focus on execution

The year 2018 would be year of execution. With a large number of projects running behind schedule, the year could see good supply of houses across the major markets of India. The developers would also prefer to deliver first than going for the new launches. Land bank has already turned out to be land liability for many, and hence no one would be willing to invest in pipeline visibility of next 10-20 years anymore.

JV/JD & consolidation

JV & JD model would be the market trend of the year and there will be major industry consolidation. Some of the distressed and fiscally mismanaged developers will be taken over by the larger players. The trend could possibly clean up the market to some extent.

Emergence of cities

With traffic bottlenecks killing productive time, cost of doing business per sq feet, and reality of more compensation to migrant workforce in the metro cities, the corporate sector would evaluate the prospects of operating out of Tier-II cities. The demand would thus force the commercial developers towards Tier II cities. 

REIT era 

The country's  maiden Real Estate Investment Trust (REIT) is expected to be launched in the first quarter of 2018. “This would go a long way in bringinging further tranperancy in real estate and also help incurbingBenami transactions”, Samyak Jain, Director, Siddha Group

Shift to online transactions

The volume of online transactions just a year after demonetisation has increased manifold. Digitisation has paved the way for an organised approach in terms of purchasing property, land acquisition, ownership records and documentation and has significantly improved the ease of doing business in the sector. “With the consolidation of these reforms there is a bright future in store for the real estate sector and it will see a remarkable transformation in the long run”, adds Samyak Jain

Over-supply kills affordable market

Affordable housing, of course, is the buzzword in the market today but any project of mass housing won’t work for the developers. The case in point is markets like New Rajarhat in Kolkata and Noida Extension in Delhi-NCR where the houses at the rate of around Rs 3500 have few takers.

— Inputs by Geetu Vaid