According to Anuj Puri, Chairman of Anarock Property Consultants,
“The residential segment is facing serious headwinds at the moment. Though sales have started picking up, it will take some time for serous price appreciation to start happening.”
The liquidity crisis had adverse effects on HFCs (housing finance companies) and NBFCs (non-banking finance companies), therefore, the mid-income sections are prone to top billing. Another phenomenon is the abundance of supply but a dearth in demand which has left the residential sector in turmoil. The conclusion, thus, is that although there are low chances of making money in residential realty, look out for the commercial sector or wait for REITs (real estate investment trust).
Trends in Residential Real Estate
In spite of the residential segment being a mess a few tends are expected to emerge in 2019.
- Because of the NBFC crisis, the consequent liquidity crisis has left real estate developers looking forward to a bleak and tough 2019. Therefore, this year will be no different than the last few for potential homebuyers as there will be no changes in prices and rates of property as developers will put aside any ideas about new projects and will instead try to get rid of the existing properties in their possession. Regulatory changes like the GST bill, dearth in demand and Real Estate Act, 2016 have left them with little breathing room.
- Although sharing an apartment with another person is in no way a new trend as it’s something that even students from other cities usually do, it has got a new name – Co-living- because of the increase in such options. Various privately owned apartments and hostels operate on this basic concept. There is an estimated rise in people opting for co-living in 2019. While this option is a trend that will persist only in metropolitan cities like Pune, Gurgaon, Mumbai and Bangalore, tier 2 cities like Lucknow and Jaipur have also seen a rise in working individuals and students choosing these options.
- Many experts anticipate 2019 as the year that will see the launch of the first Real Estate Investment Trust (REIT). Chief economist and head of research and reis at JLL India, Samantak Das, has said that,
“One of the major drivers for the growing interest of investors in the commercial office space has been the government’s move to bring in progressive modifications in india’s REIT policy in last three years, making it more market friendly. As a result, global investors have nested significant capital in acquiring office assets for building their REIT portfolios in India.”
As far as commercial real estate goes, co-working spaces are becoming a trend. Hence as asserted at the start of this article 2019 does seem like a bleak year, but there is hope as both supply and demand are being stabilized by their incentives to both homebuyers as well as developers. Whether these schemes bring about any significant change, for the better, remains to be seen.