Many surprising twists happened in 2016 like demonetisation, RERA, GST, Benami Transactions and FDI relaxation that likely changed the outlook of Indian realty in 2017. All these policy changes affected the real estate sector in 2016, but it has not been concluded whether these changes have been good or bad for the industry. In 2017, with the implementation of these reforms, a clear picture was revealed along with the possible pros and cons of these changes.
Here is a list of positive impacts on Indian real estate:
Housing loans got cheaper, which sufficiently boosted housing demand. Due to boom in start-up culture, there was a splurge in demand for commercial real estate. RERA brought transparency to the sector. Only credible, reputed and organised builders were allowed in the market.
Let’s see in detail what was in store for the Indian Real estate in 2017. Commercial Spaces
With growing IT industry, the demand for commercial spaces has been on the rise. 2017 saw a demand-supply gap in commercial spaces in cities like Bengaluru, Pune, and Hyderabad. As large IT MNCs have invested in the Indian commercial real estate, demand for commercial property has risen, which in turn increased the rent of commercial properties because of the shortage.
The growing demand for infrastructure and IT hubs is a reflection of the commercial section growth. This is how demand in different commercial segments is predicted:
Industrial: Online business, warehousing and transportation have increased enormously. The growing manufacturing industry has created an immense demand for commercial real estate. Last, but not the least, Delhi Mumbai Industrial Corridor (DMIC) has shown a significant boost in real estate.
Retail: In 2016 many retail giants entered India and spread their wings this year, that spurred up the demand for the retail sector as well. CAGR was expected to increase by 8% from USD 518 Billion in 2012 to USD 850 Billion in 2017, which is somewhat close to this figure now. Moreover, it was also expected that the absorption of land will reach 15 million sq. ft. till the end of 2017.
Office: With the boom of start-up culture in India, office space requirements are already rising. Almost 40% of the office space consumption in 2017 was done by such companies.
Talking about the residential market: Primary Market
In 2017, sale in primary markets across cities was expected to rise as prices of the units were already at the lowest. With the home loan rates getting cheaper and, RERA implementation, majority of builders were pushed to complete their delayed projects to avoid penalties. This definitely boosted the buyer confidence in investing in the ‘primary market’. Secondary Market
Demonetization led to a decrease in liquid cash which reduced the demand for homes. However, lower interest rates gave a slight boost into the demand in this segment. But the overall demand remained low, which brought down the prices in ‘secondary market’. This trend is expected to continue till liquidity comes in the hand of buyers and government bridges the gap.
With various township projects in Mumbai
and residential projects in Mumbai
being developed, 2017 was the year of biggest transformation for Indian Real Estate.