Should investors and homebuyers feel positive about the real estate market in 2012? Should the fact that the sector in India attracted as much as $1,700 million in private equity during 2011 build buyer confidence? Lipi Mohapatra spoke to a few experts to comment on real estate trends to watch out for in 2012. Here’s a lowdown.
Vice Chairman & Managing Director, Knight Frank India
• As far as the residential segment is concerned, the deadlock between the buyers and developers should break in favour of buyers. As this happens, the pent up demand from the section of buyers who are sitting on fence in anticipation of price correction would translate into improved fortunes for the residential property market.
• Employment scenario, inflation and interest rate have a bearing on the overall sentiment of buyers. Since houses are bought by people who are confident, these factors will have a role to play and hence cues from government action will be keenly observed.
• In terms of the commercial office market, the performance of the service industry will have a significant bearing.
• The slowdown in the global economy, which impacts the Indian BPO sector, and muted expansion plan of domestic players will exert pressure on the commercial office property market.
• The commercial office market shall continue to remain subdued on account of weak global and domestic economic indicators. As policy deadlock breaks and reforms gather steam, leasing activity shall improve. However, rentals will remain under check on account of a strong supply pipeline in major commercial centres.
Director, Sanghvi Group; Secretary, MCHI Mira-Virar City
• With luxury real estate experiencing a slow movement of inventory, buyer sentiment has tilted in favour of affordable housing across the extended central and western belt of the city (Mumbai). This led to paradigm shift in consumer preference.
• With various infrastructure proposals for the city, connectivity is only set to grow stronger, making commuting easier and faster. This in turn has given rise to projects in regions beyond the Mumbai Metropolitan Region.
• In 2012, the sector will maintain steady prices and projects across the spectrum with emphasis on value for money. However if delays in approvals continue, there would be a huge gap in demand and supply in lower and mid-income segment housing, that may result in further price hike.
• Discounts and freebies will continue in the coming year.
Vice President, IFCI Infrastructure Development Ltd
Buying Trends: The buying trends are shifting from concept to real buy in the real estate market. Today, the customer is educated and aware about the product and pricing. He looks for better product in best pricing. End-users and investors do a detailed due diligence not only of the property but also of the developers and their track record, other completed or ongoing projects and such like. They also negotiate hard for the basic prices and other variable rates. They would like to be satisfied and minimise the risk of investment.
Selling Trends: These have also changed in the market now. Due to lack of project funding, developers are more dependent on the sale of the project for cash flow. New schemes have been launched, and are clubbed with various options that are floating in the market. The market of readymade projects is growing as the purchaser want to see what exactly he has bought, and wouldn’t mind paying a little more to the developer for this.
Trends beyond metros: Small town and mini-metros are attracting developers, as most of these cities have sustainable economic drivers to create a demand. The demand for LIG and EWS flats is still soaring as the gap has not been filled up because of land cost and lack of public infrastructure. The flip side is that individual funding is not possible for this segment as they don’t have regular income. Investments have also shifted towards fixed deposits and bonds as they have attractive rate of interests.