In 2014, Developers Are Hopeful about Realty Sector’s Revival

It is believed that there might be a reversal of the slowdown in 2014, as the real estate sector is facing costlier borrowing and increasing property prices. They expect sales to pick up post the general elections.

It was seen that the year 2013 saw muted commercial leasing, low demand for housing units, buyers’ discomfort due to delays, a number of unsold housing inventory, limited projects’ launch and debt-ridden developers scoring lower revenue-net profit numbers in real estate.

Even in the midst of all this, there was a ray of hope in the form of two major government initiatives for the real estate sector. The two major government initiatives were the proposed Real Estate Regulatory Bill and the new Land Acquisition Act which will go a long way in making the real estate sector more accountable and transparent.

However, these moves by the government didn’t go down that well with the developers as they felt that the provisions were more farmer-oriented and consumer-friendly and might lead to delays in the development of projects and enforce price escalation. According to the chairman and managing director of a renowned company, he stated that the provisions of the Bill would result in escalated land and project costs and thereby affect affordability of real estate across India.

According to President, CREDAI-NCR, as has been observed in the past few years the controversies with respect to forcible land acquisition, the Bill is surely the requirement at the given moment. But, given the present situation, the Bill makes the process of land acquisition time consuming, he said.

The present condition of the real estate industry is cash-strapped. Hence, the realty industry welcomed market regulator SEBI’s draft guidelines to allow Real Estate Investment Trusts (REITs) and Commerce Ministry’s proposal to relax FDI norms. It is believed that no sooner these steps are implemented, they will surely help in reviving the global investors’ interest in a sluggish property market.

According to Chairman of CREDAI, he stated that they were hopeful about the year 2014 and hope to see a positive shift from the earlier years. Thus, it would bring in the much needed constancy and clearness in the property market. It is also believed that all areas, which seem to have good social infrastructure and connectivity, will witness maximum real estate development in the coming year. He also stated that they were looking forward to 2014 as a much better year for the real estate sector as compared to 2013.

Chennai, the New Desired Hub for Real Estate Investment

In a recent survey done by PwC said that Chennai City for the first time has become the favourite hub for real estate investment for both domestic and international investors who are looking for secure assets on investments that will be outstanding in 2014.

The survey done by PwC with a heading 'Emerging Trends in Real Estate in Asia Pacific 2014' showed that in the Asia Pacific region for the first time Chennai appeared in the list of top 25 real estate destinations along with cities like Delhi, Bangalore, and Mumbai that have been in the top 25 list as ideal destinations.

Gautama Mehra, Executive Director in India for PWC said that interestingly, Chennai City has been chosen as one of the destination for the first time by investors for investments in real estate. He also added that this shows the investors interest in investing in major markets from conservative assets has moved to niche market with new and steady assets.

The survey report also showed the ranking of the cities where Bangalore was ranked at 20th place in the list falling from the 19th position in 2013, Mumbai was ranked at 23rd place, which had slipped from 20th position in 2013, Delhi remained at 21st as in 2013, and Chennai City, the new entry in the list was positioned at 22nd.

The rankings mentioned in the report is based on the views of over 250 renowned real estate experts worldwide that included the developers, investors, property company representatives, brokers, lenders, and consultants.

He also stated that though the domestic markets continue to grow strong in the cities that were ranked low, but the real estate market didn’t attract the international investors as anticipated due to the continuing economic problems and fall in the value of the rupee on the middle of the year.

With national elections alarming and it is likely that post election the investment market will be more approachable for foreign investors and many foreign investments are waiting for the election result, said Mehra.

Mehra also added that the domestic cities that have slipped in the rankings, yet retaining positions in top 25 lists shows the negative and positive impact on the markets. Speaking about the negative impact is due to the combination of market, regulatory, currency, and political hazard that raises a sense of concern and the affinity of foreign investors to wait on the sidelines; while the positive factor is the undeniable prospective that continues to drive the interest levels.

Furthermore, Mehra adding on the view of the report, he said that a more favorable and transparent environment in the market will attract greater levels of investment from both foreign and domestic.