Real estate shows signs of revival after demonetization
The confidence of homebuyers has started coming back and those sitting on the fence can be seen returning to the market, which is good news for the real estate sector.
The nation’s real estate sector has witnessed many ups and downs ever since the onset of global financial crisis in 2007. However, just as it started doing well during the middle of this decade, the demonetization of high-value currency notes in November 2016 again hit it badly. The crisis was further aggravated due to the implementation of various policy reforms like RERA and GST. Although these reforms were aimed at protecting consumer interest, improving transparency in the sector and making builders more accountable, among others, however it took some time to gain the confidence of homebuyers.
Although more than a year after it was formally implemented, RERA is yet to be implemented in some states, however, its impact is now being felt on the landscape of real estate. No wonder, the confidence of homebuyers has also started coming back and those sitting on the fence can be seen returning to the market, which is good news for the sector.
Another factor which has worked in favour of real estate is the Modi government’s continued focus on affordable housing, backed by its ambitious scheme ‘Housing for all by 2022’. No wonder, as a result of macro-level regulatory developments, the residential sector has witnessed significant structural changes over the past two years, and demand for affordable housing has continued to drive residential sales, which is expected to stabilise going forward.
The top seven cities – which include MMR, NCR, Bengaluru, Chennai, Pune, Kolkata and Hyderabad — witnessed new launches of close to 50,100 units in the Q2 of 2018 compared to 33,400 units in the Q1 of this year. The major cities contributing to Q2 2018 new unit additions include Mumbai Metropolitan Region, NCR), Bengaluru and Pune, altogether accounting for 75% of the new supply.
Out of the seven cities, the National Capital Region alone contributed close to 17 per cent of the new supply with 8,500 units, showing a 89 per cent rise over that of the last quarter. Of this, 54 per cent consisted of units in the affordable housing segment.
Thus, while the affordable housing segment has been the driving force in the residential sector, even commercial real estate absorption has remained strong, showing signs of a robust business environment.