The year 2018 comes to an end, and with this ends the year of speculations, ups and downs, and resettlements. Indeed, the year 2018 was a roller coaster ride for the real estate sector. Policy reforms like GST and RERA as well as monetary reforms like Demonetisation were still troubling the market when it started, the year is now ending with a boom in co-working and commercial real estate. Let’s hear from the developers and industry veterans how they sum up the year 2018 and what are their expectations from the new year 2019.
Dr. Niranjan Hiranandani –National President- NAREDCO opines that “As the disruptive impact of policy reforms faded away early this year, 2018 had witnessed the sign of revival. The industry has evolved extremely with an optimistic impact in terms of accountability, transparency and compliance mechanism balancing the scales with consumer becoming paramount. The residential segment faces challenges to cope up from the rippling effect of liquidity crisis hit by NBFC blow, locking up of 70% funds in escrow and postponement in logging sales to save tax burden on under construction property. This situation has created urgency to source out alternative fund avenues for the ongoing projects and relieves liquidity crunched sector on priority. As we stand on the cusp of 2019, we look for some sort of magic to conjure up funds and ensure the sector remains work in progress. We are extremely bullish about the imperative growth of housing to gear up India’s GDP growth at the projected rate of 7.8% and truly emerge as the fastest growing economy of the world. An ambitious objective like Housing For All by 2022 and planning of slew of mega infrastructure projects across the country will co-script the sustainable growth story of the Indian economy along with perennial job creation.”
On the other hand, while talking about the Mumbai realty market in particular, Babulal Varma, Managing Director, Omkar Realtors & Developers says, “The Mumbai realty market in 2018 reflected a bearish –to-steady market with the second half witnessing tighter liquidity situation in general. However, few projects offering great value within the city’s micro markets attracted encouraging customer attention. Brand Omkar’s inventory in the boutique luxury and luxury categories namely Sereno and Bliss collection located on the WEH outperformed the market average riding on its ticket sizing, design & amenities, location factors. And I expect the demand for such value offerings, as awaited by homebuyers, will be positive during 2019 too. The industry too looks forward to having a more positive liquidity situation during 2019; considering its high relevance to country’s economic growth.” Mumbai is one of those markets where RERA was brought into implementation. With RERA in place, the Mumbai market has become more transparent and buyer-friendly.
Anindya Dutta, Co-founder, Stanza Living, a company reimagining the student housing sector in India, says, “The Student Housing sector in India is currently a $15 billion industry. The sector sees robust demand from nearly 11 million migrating students within the country. However, space is largely unorganized, with lack of quality infrastructure and personalized services being significant gap areas. There has been growing interest and acceptance for technology-enabled world-class student housing ventures like Stanza Living, which are focused on professionally organizing and reimagining student co-living in India. Today, we are the largest player in the space. We grew multi-fold, from over 100 beds capacity in 2017 to over 2000 beds and 16 residences across Delhi, Noida and Greater Noida. Realizing the potential, marquee global investors like Sequoia Capital, Matrix and Accel Partners have invested $12 million in Stanza Living.”
He further says, “The student housing sector will continue to grow robustly, driven by migrant-student demand that is expected to echo the growth in higher education avenues. Additionally, a discerning student population that seeks a professionally managed student living experience, catering to their particular needs and aspirations, is leading to the growth of brands like ours that can deliver this value proposition. In line with this, we have set ourselves an aggressive target to grow to over 10,000 beds within the next year. In 2019, Stanza Living will be expanding to educational hubs like Bengaluru, Pune, Hyderabad, Chennai, Dehradun, amongst others.
Khushru Jijina, MD, Piramal Capital & Housing Finance, while putting things in perspective for the housing finance sector, says, “2018 was a moderate year for the real estate sector with various external shocks like demonetization, RERA, and GST affecting buyer confidence across markets, even though the longer-term impact of these regulatory measures was seen to be largely positive. The preceding quarter also saw an IL&FS default resulting in a liquidity crisis for the financial markets, most particularly impacting HFCs and NBFCs alike. This posed a new challenge for the real estate business that has a high dependency on the availability of liquidity to fund the liability side of most lenders.
Against this backdrop, 2019 is likely to start on a moderate note with the sentiment remaining muted in the run-up to the upcoming general elections. Today, 70% of the housing finance book by value is attributable to a few metros that primarily include Mumbai, the NCR, and Bengaluru. Most of the HFCs will have to wait for a rationalization of prices to drive growth whilst also looking beyond Tier I markets where housing units are still affordable. Along with the government and regulator’s efforts to revive the real estate sector, developers will also look to come up with multiple promotional offers and subvention schemes that are focused on driving a purchase decision amongst the salaried class.”
2019, being the year of general elections, is certainly expected to move a bit slow. However, once the elections are over and the government in the center is well settled, things are expected to pace up. By the time the government formation procedures are complete, the industry would be ready to welcome the festive season. Moreover, the commercial real estate has already started showing signs of revival, it is expected to further grow in the year 2019 as well. Therefore, overall, it would be safe to say that the upcoming new year will be the year of settlements where the impacts of monetary and policy reforms would further help the sector strengthen itself.