2nd of the series
Track2Realty Exclusive
The anticipated demand is likely to exert an upward pressure on property prices especially in markets like NCR, Mumbai and Bangalore where the demand-supply gap is high. On the other hand, the tier II cities such as Pune, Hyderabad, etc as a result of the relatively lower demand-supply gap between 2011-15 are likely to see appreciation of capital values at a slower pace compared to the tier I cities during this time period.
“The housing demand-supply scenario and the resulting gap is likely to reduce in the next five years. However, the upcoming supply needs to be priced judiciously along with appropriate location, infrastructure, connectivity, relevant features and amenities to ensure absorption,” said Akshay Kulkarni, Executive Director, Cushman & Wakefield, India.
Of the total demand in the top seven cities, the mid-ranged housing segment is expected to drive the maximum demand (45%). Majority of the developers in the top seven cities are concentrating on this segment which would help reduce the demand- supply gap, the report says. On the other hand, the affordable segment of the property market which is likely to register approximately three times more demand than supply might see gap increasing during the next five years (2011-15).
“We understand that majority of the supply will be for mid ranged housing, however, there is a very large latent demand for Lower Income Group (LIG) and Economically Weaker Sections (EWS) housing,” Kulkarni said. “Several states across India are considering allocating a percentage of developed land to LIG and EWS in order to meet the demand arising from this segment. This may help in boost the supply in the affordable segment.”
Therefore, amidst the gloomy outlook on the eve of the year 2012, there is a silver lining as well. After all, home buying across the country is not about pure investment alone, but something atop the Maslow’s Pyramid of Human Needs. This brings to the fore every home seeker would like to know– is this the right time to invest in a home when there is so much uncertainty on where the Indian residential real estate market is going? Would it not be more prudent to wait until developers come down on their prices and the RBI assumes a more benevolent stance on home loans?
Sachin Sandhir, Managing Director (South Asia), RICS says, “There has been a visible slump in the market on account of over-priced residential units and the general state of economic flux in the country. Consequently, huge inventories have built up with few takers with absorption levels for existent housing stock as low as 15% in most markets. Considering residential real estate accounts for a major chunk of market activity with a direct impact on commercial and retail spaces, stock pileups in this segment will definitely have a cascading effect on other property types and further disrupt market sentiment. Therefore, it is likely that we will see most developers looking for various avenues to reduce stock pile-ups and in fact channelize funds and improve liquidity; in another-wise cash strapped market.”
