Let’s get straight into this question, which has been a concern among all stakeholders – financial planners, property owners, investors and prospective buyers – over the last few years. And only because real estate, particularly residential, did not yield the same returns as it did during its Golden Era of the early 2000s.
According to a World Bank report, India received USD 79 billion in remittances in 2018 – with a sizeable portion going into real estate. NRI investments into Indian real estate are led Indian expatriates from UAE, USA, UK, and Canada. In terms of Indian cities, Bengaluru, Mumbai, Pune, Hyderabad, Chennai and Delhi-NCR currently attract the lion’s share of NRI investments.
The country’s housing market has also seen the highest impact of policy-induced disruptions. Given the fact that the housing market was tainted by malpractices and lack of customer-centricity by developers, the Government had to step in with policy interventions squarely aimed at cleaning up the sector.
Investors are scouting for investment-ready assets in core office locations in Mumbai, Delhi-NCR, Bengaluru and Hyderabad, which together accounted for about 77% of the total leasing in 2018. We foresee higher investor interest for Greenfield projects in southern cities, especially Bengaluru and Hyderabad, which are witnessing pent-up demand in key office corridors.
The Indians think instead of media hyperbole of big measures many of the small but practical measures can go a long way to ensure a house for each family, if not each individual. Some of the suggested measures may not make the government popular, and hence the Indians are not convinced with the promise of housing for all.
This policy ‘trishul’ brought about a paradigm shift in the way Indian real estate does business and laid the groundwork for improved transparency and efficiency in the sector. However, while end-user and investor confidence were rekindled for real estate, it did not exactly set the industry on fire with renewed interest.
Currently, there is 4.0 million sq ft of operational Grade A office stock and an additional 5.7 million sq ft of new supply scheduled through 2021. As per Colliers Research, occupiers are considering North Bengaluru for expansion and consolidation as infrastructure improves in the area and supply becomes available.
Construction consultancy firm, Linesight has opened offices in Mumbai. Linesight intends to focus on Mumbai, Pune, Bangalore and the Hyderabad metro cities of India as part of its expansion plans in the region.
This is a major push to the housing sector as aspiring home buyers now have a wider range of options to choose from. Additionally, developers would be enthused enough to commit towards offering more residential options in the affordable category.
Cash-strapped builders have been hoping for all and any Government interventions which can help boost their sales volumes. This GST cut will provide such a boost, at least in the short-term as more fence-sitters who had been postponing their purchase decisions now have an additional incentive to take the plunge.