Residential real estate in India has picked up the pace again regardless of the economic situation. Considering the huge demand for homes in the nation, this is not really shocking. However, the demand does not equal absorption in a price-sensitive country like India, where the greatest requirement for residential properties stems from the EWS and middle-income group. The high dependence on home loans by the salaried class underscores the price sensitivity factor even further.
Past few years have not been very good for residential real estate in India. The sluggishness was most pronounced in the prime cities. On account of resurgence in employment-driven market sentiments and the arrival of a number of right-priced residential projects, Pune proved to be a striking exception. The city showed a very healthy demand for mid-priced residential propertiesin the past two years.
The reasons for the generalized slowdown in property market in India are not very difficult to predict – inflation led to decreased purchasing power and financial confidence, while the RBI went through the ceiling with its spate of hikes in interest rates. This obviously led to a steep rise in the EMIs that home loan borrowers had to bear. Property prices remained high in most cities, largely because developers were hit hard by the vastly increased costs of construction and debt.
At the same time, the potential for most salaried people in the country to switch to more lucrative jobs took a nosedive because of the fallout of the economic crisis in the developed countries. All this combined to bring about a sort of stalemate between developers and property buyers in cities where inventory as well as property rates remained high – most notably Mumbai, Bangalore and Delhi.
For the last 3-4 years, residential real estate market has seen sluggish demand, which has caused the unsold inventory levels to go up in some of the key Indian geographies. Supply/demand mismatch in terms of price and configurations has been the main reason for the rise in inventory levels.
From developers’ point of view, this has eventually resulted in:
Correction of prices in many markets to improve sales velocity of unsold products.
Increased project launches with the right configurations to cater to existing demand.
One way or the other, factors have now transpired to make properties in India a buyer’s market that gives investors the upper hand. They have a lot of options to choose from, with the added benefit of flexible rates, lucrative cash back offers attractive payment plans.
Interestingly, 2016 had started on a sparkling note. The residential real estate market, which had witnessed a slump in project launches in 2015, showed a visible comeback in the first quarter. The market has witnessed increased traction amongst the investors and buyers.
Promising projects with high end amenities and top notch facilities have gone an extra mile to lure the investors thereby creating waves of positivity in the real estate market. Now a days, some state of the art projects also offers perks like helipads, gazebo and many more. This has also played an instrumental role in attracting the buyers in India as they can enjoy state of the art lifestyle in India itself.