Changing Face of Indian Residential Real Estate

Ashwinder Raj Singh, CEO - Residential Services, JLL IndiaThe Indian residential real estate market has been going through a churning process for past few years and as mentioned in our age old mythological scriptures, such an amrit-manthan did bring out the nectar! The world is changing real fast and the technological advancements have brought about monumental changes in the way. We conduct business that are showing up in the real estate market in a massive manner. From the grassroots level till the policy devising rooms of the government, there’s a sea change in the way things happen.

Macro-economic Factors
If we look at the last five years, year 2012-13 was the last time we saw the markets performing beyond expectations. Not only new launches, but sales and prices of the properties were also going north and then the economy started slowing down massively and growth almost stalled. That, coupled with inherent problems within the real estate sector slowed down things drastically.

Developers’ Performance
The economic boom of early 2000’s that got carried forward in the initial phase of this decade led to many developers making hasty decisions and setting unrealistic expectations. Unplanned launches, financial mismanagement, not having their ears to the ground led to severe liquidity crunch, a fall in sales and bad reputation. However, serious players have learnt their lessons and tightened up their belts to deal effectively with the changed economic scenario.

The end user has been patient enough to defer buying his dream house at sky-rocketing prices while at the same time making investments in the projects with the right mix of price and need. They have also become more aware, been investing time in doing diligent research and exploring various options before investing their hard earned money. Raising their voice against fraudulent developers has created awareness and ensured that both the executive as well as the judiciary takes note of their concern and bring necessary legislative and policy changes to make the sector more transparent and efficient.
Technological Factors
With smart phones in every hand, sales don’t happen only in the physical world, but in the virtual world as well. Out of 350 MN internet users in India, 200 MN access the net through smart phones today as per Google. That’s the power of mobile technology today. 5 years have seen the advent of social media in a big manner and e-commerce has grown massively. On the one hand, the developers have realized the reach internet provides in tapping the potential customers, on the other hand buyers also find it easy to explore various options virtually before physically checking out the short-listed properties. Builders have come up with virtual tour of properties, approaching potential buyers online, there are websites acting as platforms for any and every kind of property across the country and great efforts are being put to provide as much detail as possible to ensure transparency.

The primary market - or, more specifically, the market formed by projects undertaken by reputed and credible developers in the top 8 Indian cities - would remain more or less unaffected by

Policy Initiatives
The real estate sector is expected to touch $180 billion by 2020 and is currently contributing almost 5-6 percent to the country’s GDP. Apart from that it also generates a lot of employment opportunities directly and indirectly. Understanding its importance in the national economy, the relevant authorities are doing their bit to make the sector come out of the dumps and achieve its potential. Hence, we hear of initiatives like Smart Cities, Housing for All by 2020, AMRUT etc. whereby the average citizen will get to live a quality life with roof on their head, the sector will receive the necessary stimulus and support to contribute in nation building without compromising on the business aspect. However, the most important legislation to make a huge impact is RERA (Real Estate Regulation and Development Act) that will change the way business is done till now. It will bring efficiency, will make developers answerable, cut out the fly-by-night operators bringing bad name to the sector and ensure complete transparency in the business dealings.

The primary market - or, more specifically, the market formed by projects undertaken by reputed and credible developers in the top 8 Indian cities - would remain more or less unaffected by Demonetization. This is because buyers into such projects take the home loans/finance route to buy their homes, and transactions are done through legal channels, he said, adding that there would not be any major impact on sales in this segment.

These developments clearly indicate that change is on the horizon. When any business is conducted keeping in mind the welfare of the end consumer, it flourishes. With substantial set-backs in the recent past and the realization amongst both the builders’ lobby as well the government about the disadvantages of flawed policies and uneven playing field, the sector is set to witness a more organized and cohesive approach towards building infrastructure. Whether it is the developers or the authorities, every decision is being made keeping customers in mind truly making him the KING! This approach will result in turnaround of the sector giving boost to investments and a healthy positive growth.