Demonetization on Real Estate: No scope for correction As Housing Prices Is Already At Low, says CREDAI

Realtors' body CREDAI said on Saturday there is no further scope for correction in housing prices in the primary market post demonetization as rates are already ruling at the lowest level. Credai, however, said that the real estate industry fully and unequivocally supports the decision of the government to demonetise currency notes of Rs 500 and Rs 1,000 in the national endeavour to eliminate black money, corruption, fake currency and terror financing.

The association in a statement said that the primary market is funded by banks and financial institutions which are all regulated entities. As such, cash component is not an integral element of the primary market. Therefore, Credai denies adverse impact on the primary real estate market arising out of demonetization. In fact, the primary segment is expected to gain at a rate of 15% YoY, the statement said.

The government's resolve to eliminate black money and corruption is in the interest of the common man as well as business and industry, it said. Real estate industry contributes 7% of country's GDP and is the second biggest employer after agriculture. Given the scale and size of the industry, it is imperative that Credai articulates the impact of demonetization on the industry and brings it to the knowledge of the general public, it said.

In the aftermath of demonetization move, banks are going to have additional funds upward of Rs 10 trillion. Hence, a fall in interest rates up to 200 basis points is expected. An early sign is seen with country's largest lender State Bank of India cutting its deposit rates by 1.75%.

According to Credai, we see home loan rates coming down from the present level of 9.25% to less than 7% in less than one year from now. This would bring down the EMI for the ultimate consumers. Credai expects the mop up of black money to also lead to higher tax collection and a lower rate of personal and corporate income tax from the next financial year onwards. In other words, the demonetization would put more money into the pocket of home purchasers through lower tax burden and incentives for home ownership.

The tendency towards lower rate of interest is also going to be strengthened by a low rate of inflation. Credai, comprising 11,500 real estate developers spread over 166 cities in 23 states in the country, is the apex body for private real estate developers in the country.

Bangalore and Mumbai, tops the realty investment destinations for 2017 in the Asia-Pacific (APAC) Region

Bangalore and Mumbai have become the top two realty investment destinations for 2017 in the Asia-Pacific (APAC) region, says a report. While capital of the Philippines, Manila got the third spot, Ho Chi Minh City in Vietnam and Shenzhen in China stood fourth and fifth, respectively. 

The PwC-Urban Land Institute report further said that the domestic realty market as a whole has become a compelling story, thanks to the availability of high-quality assets that offer good yields as well as strong tenant demand and falling financing rates. In development category, Bengaluru retained the first spot followed by Ho Chi Minh City, Mumbai, Manila and Shenzhen, it said. 

Though Bengaluru topped in investment and development across APAC region, the headwinds facing the BPO industry -- the mainstay of city's realty market -- post Donal Trump's win in the US presidential election, needs to be seen how it will fare. "While Bangalore has emerged as the top real estate market in the country, peak growth in the city is now behind it. 

Strong demand from IT and e-commerce sectors is likely to continue, but questions over the long-term prospects of the BPO sector have emerged," PwC India partner & leader for real estate Abhishek Goenka said. Regarding Mumbai, the report said that the geography has prevented easy expansion of city's metropolitan area, which has made it both the most expensive city in the country and the slowest growing.

 But a major road and rail infrastructure programme will allow easier access to the centre from outlying areas, with most construction scheduled for completion before 2019, it noted. "Mumbai on the other hand, while constrained by geography, is now seeing a strong recovery with the market no longer dominated by financial players. Vacancies remain north of 20 per cent, but occupancy problems tend to affect only less desirable buildings, with good-quality assets continuing to see strong demand and rental growth," Goenka said. 

On the Delhi-NCR region as one of the country's most important commercial and logistics hubs, PwC's real estate tax partner Bhairav Dalal said, the faster growth of new infra work in the form of high-speed railway network in New Delhi bodes well for demand for commercial facilities

Read more at: http://www.moneycontrol.com/news/business/bengaluru-mumbai-top-realty-investment-spotsapac-report_8017521.html?utm_source=ref_article

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Real Estate Market Poised For Recovery in 2016

The Indian real estate market has been treading the slugging path for the last two years. There has been no recovery in buyers’ sentiment as prices remain stable, and there is less hope of capital appreciation in the short-term. 

In 2016, however, most of these factors will turn positive reversing buyers' as well as developers’ sentiments. Here’s a glimpse of how the Indian real estate market in 2016 will look like:

Lowered interest rates: The Reserve Bank of India (RBI) has cut interest rates by 50 basis points in two rounds this year. Though the transfer of benefit by banks to their customers is much slower than expected, a few commercial banks are cutting interest rates for home loan seekers, giving the much needed boost to the sector. The positive effects of these cuts will become much more visible for the property for sale in India by the next year as those who are waiting for much deeper cuts will stop doing so and seal the deals.

Easy payment plans: Developers too are changing track to attract buyers into the residential markets. Builders with large debts and piling inventories are expected to ease the process of property investment with easy payment plans for homes. The prevalence of these schemes will help pick up buying properties in many cities as well as towns.

Tier II, Tier III cities rise: The property in India has witnessed large unsold inventories, a majority of which is in Tier I cities including Mumbai, Delhi, Hyderabad, Ahmedabad and Bangalore. This has prompted most of the developers, both big and small, to head to other upcoming tier II cities like Pune and Chennai where there is higher chance of capital appreciation along with the rising demand for luxury and semi-luxury apartments.

Other Tier II cities, like Indore, Chandigarh, Lucknow, Jaipur, Kochi, Coimbatore and Visakhapatnam, too are experiencing growth. The developments in these towns will be the biggest focus of the developers in 2016.

More affordable units: The change has already happened. A large number of developers are re-drawing their plans to converting 2BHK apartments into 1BHK apartments in India with fewer and simpler amenities. This will end the exclusive growth of luxury condominiums only in all the new locations, creating only posh localities out of most real estate hubs.

Increased FDI in realty: The government is planning 100 smart cities across India and other such projects similar to the GIFT city in Gujarat. These projects have already garnered huge interest in the NRI and other communities. The government has also made it easier for foreign direct investment (FDI) to flow in to Smart City projects. Such kind of money, in the form of private equity or seed funding, is expected to boost investment in the affordable segment, which will lead to growth in the real estate sector.

The sector has been slow for a very long time now. With enough boost from the government, this state of affairs is all set to change in 2016.

For more info:https://www.proptiger.com/guide/post/real-estate-market-poised-for-recovery-in-2016