The year 2012 was a difficult one for the Indian real estate sector as tough economic conditions led to lower sales and higher construction costs.
There is a general industry view that 2013 will see an improved economic climate and the real estate sector will follow suit, albeit with some lag.
However, Lalit Kumar Jain, National President, Confederation of Real Estate Developers’ Associations of India (CREDAI), felt that the year 2013 would be “make or break time for the real estate sector as it is going through a liquidity crisis. The year 2012 is one of lost opportunity for the sector as no corrective steps were initiated”.
But Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India, a real estate consultancy, was more sanguine.
“The most tangible benefits of economic improvements on the Indian real estate space will be seen in the second-half of 2013,” he said.
The Reserve Bank of India (RBI) also recently allowed established real estate developers and housing finance companies to raise up to $1 billion through external commercial borrowings.
Some projects in mass housing segments that sold well were priced in the range of Rs.4,000-5,500 per sq. ft. in areas such as Noida, Navi Mumbai and Bangalore. Projects in the Rs.16,000-19,000 per sq. ft. range in Central Mumbai, too, sold well.
Foreign direct investment (FDI) in multi-brand retail was permitted. Pranab Dutta, Chairman, Knight Frank India, a real estate consultancy, felt that “this would attract foreign investment which would not only benefit the retail industry but also boost the demand for commercial real estate”.
On measures to boost the sector, developers felt that it was essential to have a ‘single window’ clearance for projects as there were 50-odd permissions required to begin construction of a project and this could take two years to obtain. “For the common man’s benefit, interest rates should be corrected soon,” said Jackbastian Nazareth, Group CEO, Puravankara Projects, adding, “the first quarter of 2013 is likely to see some consolidation but thereafter and into 2014, we are likely to see good growth”.
The year 2013 is likely to reap the benefit of the Real Estate Regulation Bill and the Land Acquisition Bill. “The change in sentiment on account of these measures will certainly make 2013 a much better year in comparison to the last year,” said Mr. Dutta.