By Ms. Akansha Arora
Right from the beginning of
2014, there was positivity in the real estate market and the market which went
lull had complete expectations of getting back on track.
With new government
coming picture, the price trends started to correct pre-election and
post-election the expectations were surely met. The following article talks
about the changing trends of real estate in India pre and post elections.
Like every other industry, the real estate sector had kept
positive hopes and some norms that will improve the situation of the market
pre-elections. Not making a statement about the overall presence of the new
government, but the Narendra Modi Sarkar has
been quite fruitful when it comes to the property market. The market that had
faced many ups and downs since 2009 had no support from the policy makers or
the market itself.
But, the union budget has introduced a number of policies
that might change the scenario especially in the residential real estate. 2014
started off well with first quarter reporting slight increase in sales. Quarter
two and quarter three are expected to see a positive growth in the
realty market of India. Let us analyze the situation of residential as well
as commercial real estate pre-elections and how after the budget 2014, the
market can see a post-election boost.
The Pre-Election
Scenario
The economic activity started to decline from 2012 creating
a major impact on the real estate sector. In 2013, the growth was on a low base
and did not provide any strong signals of emerging growth. Higher inflation,
depreciating rupee, global capital flow uncertainty and an upcoming election,
could not let the policy makers to get a clear picture of the scenario and how
things can change for a slow market.
2013 had a slow rental growth when we talk about the office
spaces. There was a fall in the market yields which led to a faster capital
value growth. The reason of rising costs is only because of the rising costs of
raw materials and other input costs which forcefully demand the developers to
increase the price even in the not so favorable conditions.
The falling absorption rates in comparison to new supply led
to increasing vacancy rates especially in the big markets like Hyderabad,
Mumbai and NCR. Overall the supply rose by 10.6% in 2013 whereas there
absorption rate went down as much as 26% when compared to 2012.
This shape of the real estate market needed strong
infrastructural developments and government policies to bring the market back
in good picture. Therefore, there was a lot of hope from the new government
coming into the picture.
What the Budget 2014
has for the Real Estate Sector
2014 is believed to be the year of revival for the Indian
real estate market and the market fundamentals and the new government policies
are in complete agreement with the above made statement. The post elections conditions
of the market are expected to be at least stable if not in a complete booming
picture.
The budget 2014 had some good supporting points for the realty market.
Listing a few of them:
·
Allocation of Rs. 7060 crores for the
development of 100 new smart cities bringing positive hopes for the developers
in tier I and tier II cities
·
Relaxation of FDI norms in the real estate
sector
·
Norms to bring affordable housing back on track
·
Introduction of Real Estate Investments Trusts
(REITs)
·
Increase in deduction limit on interest payments
on home loans
These norms will definitely be a booster for the real estate
industry. In fact, the market has started witnessing some positivity with the
budget coming into picture.
Real Estate Market
witness an increase
in the number of home buyers after Budget 2014
This day was long awaited by the developers. Since 2012, the
market went lull and builders did not have a lot of people visiting them for
home buying process. The friendly measures announced in 2014 budget and rise in
the stock market has turned the tables for the real estate market.
The builders
report that the market has seen a moderate increase in sales in the past two
months. The subdued rise in property prices and the increasing affordability
among the mid-segment has increased. One of the key drivers is also the sense
of job security among the people which is letting the people now to think about
investing in real estate again.
Absorption of Office
Space goes up by 16%
The absorption of office space has gone up by 16% in the
first six months of 2014 and is expected to increase more in the next six
months of the year.
This increase was noted in the top eight markets that
included Delhi-NCR, Kolkata, Chennai, Bangalore, Pune, Hyderabad and Ahmedabad.
Out of these the top three performing cities were Delhi-NCR, Bangalore and
Hyderabad.
Chennai Real Estate:
Affordable Housing Expects a Boom after Budget 2014
After the budget, the real estate market of
Chennai expects a positive sentiment in the price sensitive Chennai and
some other parts of southern India. The city’s market has been an end user
driven market and is expected to be the same even after the budget.
The tax savings may not affect the buyers in Mumbai or Delhi
but definitely makes a difference in cities like Chennai. The demands for
affordable housing will certainly see an increasing demand and hence accelerate
the supply making the market one of the most prosperous.
Author Bio:
Akansha Arora is a
professional writer and blogger.
She is happy to pen down her views for various
domains like career advice, real estate and more that interest her. Follow her
at akansha.arora2112@gmail.com
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