The year 2015 did not prove to be very good for the residential Indian real estate market. A continued level of growth could not be attained due to the interplay of many factors. Many real estate investors burnt their hands and even big names have taken a hit. Inventory pile up, wary customers, builder’s liquidity crunch, banks plugging further finance, strict government controls were some of the major factors that proved a dampener to the residential real estate sector.
Despite the gloom, there is certainly some good news. In cities like Bangalore, Hyderabad and Mumbai, sales have picked up and a pause on new launches has brought down the inventory levels. Compared to the past 3 years, the year 2015 was better for the residential real estate market with new launches and price corrections.
Reviewed below is how the residential real estate fared in some of the major cities.
Over the third quarter of the year, there have been a couple of new properties in Mumbai as against the freeze on launches in the preceding quarters, developer initiatives like attractive interest rate cuts by RBI have brightened up the scenario. The year saw the launch of a basket of luxury and mid segment projects.
With a high volume of unsold inventory, there was hardly any new launches. Developers focussed on under construction projects. The NGT issue has been resolved, thus paving the way to expedite the projects along the Yamuna Expressway. The hitherto stagnant Noida real estate market is likely to revive soon.
If there was one city that saw a steady growth, it’s Bengaluru. Despite the rising demand, there were just a handful of new properties in Bengaluru. Stable growth was witnessed in all the micro markets with expected demand for affordable housing in small unit configurations.
The demand is well met by supply with a good number of successful new launches. Locations around the upcoming Metro corridors are bound to see a surge. On the whole, Chennai emerged as a good investment option poised for sustained growth.
Delhi remained a subdued market with capital values remaining almost stable. In fact there were not any major launches too thus putting brakes on the residential real estate market.
The Pune residential market has been upbeat with a substantial rise in property registrations. As the third quarter saw a marginal drop in volumes, new projects remained on hold. However, a planned retail expansion is expected to get the market back into a buoyant mode.
To summarise, the market is hampered by the wait and watch attitude of investors. Very few markets saw new launches. In the short term, the growth is almost stagnant, with just Chennai and Bangalore posting active growth.
It is expected that with the real estate market easing slowly, factors like GDP growth, reduced interest rates, a downtrend in inflation and Modi’s thrust on development and attracting foreign investment is bound to give a boost to the market and help it to attain favourable growth in the coming five years.