MUMBAI: The year 2013 was the period of reforms and surprises for real estate industry. Government landed the sector with policy reforms to restrict land disputes across India, introduced REIT for healthy funding and also relief through various changes in act then at the same time buyers were worrying about rising inflation and interest rates that affected home loan amount.
Amid all this, developers found themselves surrounded by higher construction cost and compensation, unsold inventory and decreasing foot falls of buyers. The overall scenario discouraged buyer and investor on property purchase that deteriorated real estate industry sentiments completely. But the most surprising thing was affordable housing, commercial and retail segment that kept the waves on top for developers and allied industries.
The most beautiful things of these three quarters were – developers interacted with most of the end users rather than investors. People who were prepared in advance, came forward and closed the deal. Although they were little worried about their EMIs but developers supported them equally through various schemes. Also buyers showed interest in ongoing projects and avoided upcoming projects. However, unpredictable market scenario kept investor long away.
Various schemes and offers in festival time pulled buyers and they negotiated well. From their side, developers slashed down prices up to 10-12 per cent (approximately) to keep the momentum on the right track and supported well. Surprisingly commercial and retail segment performed more than expectation. Not only on investment from PE investors but also on buyer’s side, the segment offered best deal. Rising demand of IT and ITES spaces was one of the major reasons apart from small and medium office spaces.
Two more points that we noticed in year 2013 was the sudden hike in property prices in Tier 2 and 3 cities that was also due to demand of affordable houses for buyers who were not willing to pay huge cost in Tier 1 cities or metros. Even developers took this as an opportunity due to the available land bank at affordable cost.
I will conclude with a positive note, RBI’s recent move on Repo rate was the most welcome note for the new year that brought down home loan rates slightly. Surely it brought cheers for new home buyers who are planning to buy home in year 2014. No doubt, affordable housing will be in demand this year also.