Indian Real Estate Update 2013

With the ups and downs in the realty sector and many policies amended and introduced by the government to bring stability in realty sector, let us take a look at the recent updates and happenings in the real estate market.

Dip in demand forced developers to compromise with property price:

A month ago, the slowdown in demand across many cities in the country forced the developers to reduce property price.  With the dip in demand by the end-users, developers were left with no options other than reducing the price of the properties.  To attract potential buyers, developers were forced to compromise with the property price by waiving off addition charges that they used to charge the buyers such as parking cost, preferential location charges, and many others. 

SEBI proposed listings of real estate investment trusts (REITs):

To draw more investments into the capital market and to bring accountability in the real estate market, SEBI proposed a draft Real Estate Investment Trusts (REITs).  It is said that REITs is more like mutual fund in real estate and this move by SEBI was to provide an investment platforms for investors with huge fund, who can trade units of REITs.  Seeking public comments, SEBI has invited everyone to leave their feedback and opinions on the drafts for REITs regulations.

CREDAI expressed its View about Listing of Real Estate Investment Trusts:

Welcoming the proposal of SEBI on listing of Real Estate Investment Trusts (REITs), CREDAI said that this move is positive and will help more liquidity problem that the developers often face. Mr. Lalit Kumar Jain, Chairman of CREDAI said that CREDAI will submit its point of view regarding the listings of REITs very soon.

Residential property prices moved up at a snail’s pace in the first quarter of fiscal year 2013-14:

In a recent report in Macroeconomic and Monetary Developments Second Quarter Review 2013-14 by RBI revealed that in the first quarter of fiscal year 2013-14 the quarter-on-quarter growth at all-India level in the Reserve Bank house price index was lower by 0.89 per cent, which was slow move in housing prices and though it was 14 per cent higher when compared to the housing prices of a year-ago.

With the government taking many measures and passing many regulations in order to bring accountability, transparency and reduce liquidity in the realty sector, many builders and developers like Prestige Groups, Salarpuria Groups, Brigade Groups And others do anticipate that these measures will give most the developers and builders some relief.  

Readers and potential buyers to know more about builders’ offers and reputation can also go through the property reviews. 

Booming of Indian Real-estate Market

The Planning Commission of India defines Real Estate as land, including the air above it and the ground below it, and any buildings or structures on it is referred to as realty. The Indian real estate and construction industry plays a vital role in Indian economy and is a crucial part in the development of our nation’s infrastructure base. The real estate covers suburban housing, viable offices, trading spaces such as theatres, hotels and restaurants, retail outlets, industrial buildings such as factories and government buildings. The real estate sector comprises of housing and construction sectors that involve the owners, builders/developers, investors and buyers.

Real estate business consists of dealings, such as buying, selling, and expansion of land/properties, residential and non-residential buildings.  People who mainly involve in realty business are called as proprietors/the land owners, developers, builders, real estate agents, tenants, buyers etc. Indian real estate has substantially seen growth with healthy economy accompanied with a series of Initial Public Offerings (IPOs) by property firms as well as investments by NRIs in Indian Real Estate Market.

Real estate has been a booming sector in India with the arrival of MNC and foreign companies along with NRIs investments. Indian real estate industry has seen exceptional growth over the past years. Mr. Manish Agarwal, Managing Director, Satya Group & Hony, Secretary CREDAI NCR says that the Indian Real Estate is driven by the land owners, developers/builders, tenants, and buyers because of the opportunities offered in the market.

As the real estate sector developed, many realty associations were also formed one of which is CREDAI Bengaluru, functioning in Bengaluru for 30 years with 218 reputed developers as its members in the city and 450+ developers across the State.  The CREDAI organizes realty expo, which has become one-stop for all the property buyers and investors who are looking to invest in prime properties from trusted members of CREDAI. With both foreign companies and NRIs investing in India, the real estate is definitely a promising career for both the builders, owners, developers and the buyers to make some real profit. Currently the business in Indian real estate is estimated to be US$ 16 billion with a CAGR of 30%. The latest report by Cushman & Wakefield shows that India is ranked 20^th among the top global markets for real estate investment in 2012 with investments worth US$ 3.4 billion during the year.

As both international and national developers in India are penetrating deep into the cities, India’s government and regulatory authorities are working to improve the market transparency. The Real Estate Regulation Bill is regarded as a key policy that is expected to improve India’s transparency score, which will be scheduled later this year. Despite slowdown in the economy, the real estate sector continued to rise and overall improvement was seen in major 11 cities, which shows that the Indian Real Estate business is definitely booming.