2015 may not have been the best year for the Analytics real estate website in India. 2016 has seen stagnation in property prices in almost all cities, which is an indicator that the worst might be over. Though, the surplus inventory is still not getting liquidated at the desired rate.
The status quo of real estate prices is a positive sign and implies that market correction has been achieved and it is headed towards stabilization. The illustration below shows the property supply and demand in major cities of India. NCR has been the worst hit, whereas southern cities like Bangalore and Hyderabad have shown progress backed by the IT sector expansions. Launch of new residential projects declined by 31% across India.
The focus in 2015 had been to reduce the existing inventory, which continued in the first two quarters of 2016 and is likely to be the trend for the balance duration of 2016. Two major issues which the real estate sector and especially the builders need to handle is one the delay in completion of projects and second, the piling up of legal litigations with end users. These two factors are having the biggest negative impact on market sentiment. Humane sentiment plays a major role in at least the legal litigations which in majority of cases can be resolved with mutual consent or arbitration.
The government’s reform agenda is on track and urban development is being given the push. However, the real estate sector in India is going to remain uncomfortable because this urban development programmer is not being undertaken in cites which they desire, but where it is actually required. Therefore, the developers need to come out of their comfort zones and look for expansion avenues in other towns and cities.
Large scale affordable housing unfortunately sound ‘down market’ to the Real estate trends in India who are used to moving in the ‘power corridors’ and the smell of ‘high profile’ status. The real estate sector needs to shed this syndrome, in case there is a desire for revival and get on to the brass-tacks; dirty their hands and feet and enjoy the smell of earthen sand.