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Track2Realty Exclusive
It may be momentary down because of rising interest rate, macro economic hue, affordability issues borne out of demand-supply mismatch and overall market sentiments, but forecast for the residential real estate is definitely robust keeping in mind the housing shortage in country and the inherent appetite of the Indians for house as the primary investment instrument, finds Track2Realty.
“Both the economy and the residential property sector are currently in a state of uncertainty. This has resulted in a rather prolonged period of vacillation and hesitancy among home buyers in India. The reduction in sales has impacted the capital availability of developers, and we are going to witness widespread delays in the construction of the residential projects across segments,” says Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India (JLLI).
It has been estimated that there would be shortage of 26.53 million houses during the Eleventh Five Year Plan (2007-12). The World Bank estimates India faces housing shortage of 20-70 million. This shortage of 26 million homes in India is not merely dry statistics, but the story of 26 million families who are either homeless or living in rented properties, slums or with their extended families.
India is going to have a total demand of 2.3 million units of residential property in the next five year, while the estimated supply in the same year is expected to be approximately 1 million units leaving a short fall of over 1.3 million units. According to Cushman & Wakefield’s (C&W) and Global Real Estate Institute’s (GRI) annual report “Embracing Change – Scripting the future of Indian Real Estate”, India is expected to experience a demand of 3.94 million housing units, growing at a steady pace of 11% Compounded Annual Growth Rate (CAGR). Of this 2.3 million units will be the demand from the top seven cities alone.
The report analyses demand for top seven cities – NCR, Mumbai, Bangalore, Chennai, Hyderabad, Pune and Kolkata – in which Cushman & Wakefield Research team estimated demand and supply for the years between 2011–15 (both years included). It says NCR is expected to record the highest demand of over 700,000 units, Mumbai is expected to record the highest CAGR of 14%. Bangalore is expected to see a demand of approximately 287,000 units in this period.
As a result of significant population migrating into the tier I cities, these locations are likely to witness highest demand. “Supply on the other side will fall short by a very large margin in this sector. Upon analysis, the short fall in housing in just the top seven cities is estimated to be 130%. Much like demand NCR is also expected to witness the highest residential supply, albeit, much lower than demand, which will be closely followed by Mumbai,” report adds.
