As we stand at the last leg of 2019, a look back at what the year was for Indian real estate is a worthwhile attempt to help us gauge the future and get our perspectives in order. In all probability, the not so impressive year saga in 2019 shall continue to trouble the real estate sector in 2020, and it’s expected to be a bullish year all the way around. However, not everything looks bad as the industry is slotted to receive a considerable FDI inflow, which should de-risk all investments, thus lauding its way to a promising future.
A Year of Heavy Brooding and Observation
Right from the onset of 2019, the real estate sector has struggled with surplus inventory and liquidity tightening owing to the NBFC crisis followed by the elections. Not to miss on the upside, the RERA implementation had helped to clean the oddities in the sector, which further got the boost when Reserve Bank of India took to lower Repo Rate to a record low in over nine years. Such doings are looked at as a catalyst for a rewarding future. Furthermore, the market is ripe with optimum growth in IT, consulting, e-commerce, and retail, thus ushering huge demand for commercial office spaces and shall only continue to grow in times to come. Nevertheless, developers are constantly turning towards exploring city outskirts to develop residential projects that would broaden on the grounds of consolidating demand of consumers looking to invest in larger spaces, a seemingly impossible proposition to achieve within a metropolitan. Take Kolkata, for instance; an important city for the real estate market is already witnessing luxury 2BHK and 3BHK apartments in North Kolkata, a little away from the central town but still an excellent option to consider investing for.
Also, there are newer avenues of development across Warehouse and Logistics, airports, and other expenditures for infrastructure needs initiated by the Government, which have had a positive impact on the industry. With the slow revival of all residential projects that are currently running behind schedule, 2020 is expected to witness a slow turnaround.
Will The Bailout Packages and Reforms Suffice?
To revive the real estate sector, the Government has proposed a huge bailout package that could have come at no better time. Given the fact that, for almost over a decade, the entire sector has been reeling under extreme pressure of slowdown. While the Government has already announced a big revival plan, there’s a lot left to be done from the taxation point of view. The entire industry in 2020 is eyeing to welcome proactive reforms of the Government to help enable the sector to gain its momentum. It will be befitting to see whether the Government calls in for the support of industry leaders for such endeavors to help rebuild the sector together.
How Have Things Shaped Up For Real Estate Funding Since NBFC Crisis
Ever since the NBFC crisis hit the market, the real estate sector has been staggering. That NBFC’s were a powerful source of financing for cash stricken developers; the latter took a sharp blow after it came to a halt, thus worsening the scenario. Post the crisis, NBFC lave taken to increase the rates, which makes it a lot less attractive for developers to borrow and have been affecting the operations lately. Not only the developers but also the prospective buyers have taken a backseat, thus further contributing to lessen the demand in the market. As NBFC’s disbursements have come to a freeze, the real sector market is still struggling to ensure liquidity. The sectors that are poised towards growth in the coming year include the following:
- Affordable residential housing
- Co-working spaces
- Warehouse and Logistics
The Indian real estate market is bound to undergo a rebound in 2020, which would further trigger activity across the segment as long as low-interest rates prevail in the country. With the Government offering the much-needed push towards institutionalizing rental housing, the market should revive itself across significant fronts. Coupled with political stability following the elections of May, the impetus towards affordable housing is destined to offer a considerable push across all fronts.
Can 2020 Fare Across All Factors Of Growth? As an integral sector impacting the Indian economy, real estate as industry places a vital role across emerging markets in 2020. Although the industry is destined to continue experiencing ups and downs, multiple government initiatives, for instance, REIT funds shall usher in a substantial FDI inflow. As a majority of real estate firms move towards de-risking their investments, the future can be a promising one for sure.