The 2015 REPORT CARD

While the demand for luxury projects remained subdued, the affordable housing segment managed to gather momentum in the year gone by. We discuss some factors that dominated the two major residential segments of Mumbai's real estate

The year 2015 saw the real estate sector take baby steps and move ahead after being in doldrums for a very long time. However, as we step into 2016, we take a sneak-peek into the world of two major markets (residential and luxury) of the real estate sector and their subsequent performances.

“There is bound to be a demand for quality housing, at the right location and at the right price and for that, both the private sector and the government need to equally contribute. When affordable housing will form a reasonable part of a private developer's business plan equally supported by initiatives of the government, only then will this scheme become a ground reality,“ says Venkatesh Gopalkrishnan, president (business development) & CIO, Shapoorji Pallonji Real Estate. There is a shortfall of 24 million+ houses and the requirement is high among the EWS and LIG.However, there are very few developers who want to venture into the affordable housing market. On the other hand, there were big-ticket investments made last year in the luxury housing segment. In September, Kumar Mangalam bought an iconic bungalow in south Mumbai's Malabar Hill for Rs 425 crore.In the same month, Lincoln House was bought by Cyrus Poonawalla, for Rs 750 crore.

“Developers launch about 250,000 housing units each year in the top seven cities across all segments, and 10 per cent of these launches comprise of luxury and high-end homes. The premium segment has not grown as expected, though it is picking up slowly.The demand is there but what needs to be done is to align with the needs of the customer,“ says Vikram Goel, CEO, HDFC Realty.

“The current year has been slow for the real estate sector. However, between the affordable housing and luxury housing segment, the affordable housing has relatively performed better, especially homes, which are between INR 15 and 40 lakh,“ says Gopalkrishnan.

“As per the data available from multiple sources ­ international consultants, domestic consultants, the registration offices across Mumbai and the MMR, and also data from developers ­ it is clear that there is a significant oversupply in the luxury space, and an under-supply in the affordable housing space and by and large, the absorption data is reflective of this,“ says Rohit Poddar, managing director, Poddar Developers. Will the year 2016 also pan out in the same manner or will it show any deviation?

“While we do not foresee much activity in the luxury segment, the urban affordable housing segment will present huge opportunities for developers, buyers and investors. According to a report by Cushman & Wakefield released in conjunction with CREDAI, urban affordable housing currently presents a USD 11.8 billion (Rs 75,800 crores) opportunity for the private sector. At a time when the central government is placing strong emphasis on the `Housing for All by 2022' initiative, we expect a strong de mand pipeline in the top seven cities to drive the private sector's participation in creating affordable housing,“ says Sanjay Dutt, managing director, Cushman and Wakefield.

Experts point out that the last two-three months have certainly seen a lot more buoyancy and an increase in absorption rates. Ultimately, real estate is a derived demand and a function of our GDP and industrial output. With a subdued economy, it will take time for the sales of real estate sector to improve dramatically. “We expect the economy to start growing significantly by the end of 2016. For affordable housing, prices have already started rising a little, and hence, it is advisable for prospective buyers to buy sooner than later to avail of several schemes being offered by branded developers today,“ says Poddar. However, some experts have also pointed out that 2016 will garner interest for both the segments of the market. “The government's announcement for reduced risk weight in loans for low cost housing has made it very lucrative for homebuyers in this segment, whereas the luxury housing segment will fare well due to the investment from the NRIs and HNIs,“ says Mayur Shah, managing director, Marathon Group.

Overall, the real estate sector has to pick up pace and going by the sentiments within the market, the affordable housing as well as the luxury housing segment is expected to start performing well in the latter half of the next year only, according to experts.

Source: dnaindia

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