“With demand for housing increasing, the government should introduce single-window clearance for timely completion of projects and look at rationalisation of GST for under-construction projects. The industry expects the extension of the lowest interest rate and easy liquidity regime to continue to push for a positive vision of housing for all in the year ahead,” said Ram Naik, Executive Director, The Guardians Real Estate Advisory.
In an exclusive interview with RoofandFloor, he spoke about rising sales, FDI in real estate, and much more. Here are the excerpts.
How is India’s residential real estate market positioned currently?
The Indian real estate sector has witnessed growth in recent times. Demand for residential real estate revived as homebuyers took advantage of low mortgage rates and incentives rendered by developers. Residential sales in Q4 FY21 quarter recovered to >90% volumes recorded in 2020 across the top seven cities.
With the state government boosting their vaccination campaigns, the industry is likely to see another year of development. The growing flow of FDI in Indian real estate is encouraging increased transparency. The reputed developers, to attract funding, have revamped their accounting and management systems to meet due diligence standards. Indian real estate is expected to attract a substantial amount of FDI in the next two years.
The sector has seen an uptick in sales, thanks to pent up demand. Do you think this momentum in demand is sustainable?
Residential real estate transactions began to see an uptick due to some joint initiatives taken by the government and developers during the pandemic. Weak prices, stamp duty reduction, low home loan rates, and discounts saw fence-sitters thronging the market. 2021 will be a buyer’s market as Covid-19 has escalated the need for owning a home.
Also, with the ongoing vaccination campaigns and strong measures expected to be taken by the government, the real estate market is anticipated to have a positive year that would continue to sustain the momentum of progress and demand among consumers.
Talking about the residential market, which budget segment is doing well and why?
As a result of the new normal, the way people have invested in real estate has changed. There is a clear shift in the importance of owning a house when compared to renting, where potential homebuyers seem to prefer homes with additional amenities at affordable prices.
The preference has shifted primarily to affordable and mid-segment properties in the residential segment, which has seen a growth in demand. The luxury sector recuperated post the lockdown and continues to experience a fair growth rate due to the demand for larger homes. Going forward, new launches will remain focused on developers trying to reap the benefits of strong pent-up demand in these segments. Also, the government is committed to boosting affordable housing in the near future.
What should the government do to further revive consumer demand?
With demand for housing increasing, the government should introduce single-window clearance for timely completion of projects and look at rationalisation of GST for under-construction projects. The industry expects the extension of the lowest interest rate and easy liquidity regime to continue to push for a positive vision of housing for all in the year ahead.
State governments across the country should closely look at the model prepared by the government of Maharashtra and consider reducing stamp duty and circle rates in their respective states. The move has not only proved beneficial for buyers but has also helped the developers record good sales, eventually driving the revenues.
How do you see H2 2021 boding for Indian real estate?
With employment witnessing stability and the economy reviving, housing sales are expected to sustain the existing momentum for the year. Affordable, luxury, premium and mid-segment housing will see renewed demand from the end-users. As property prices are expected to go up because of the rising demand, investors are likely to return to the market by the end of the year. Developers have been focusing on aligning supply with demand in the past few years.
Strong fundamentals in the form of increased demand-supply alignment, increased affordability and transparency, good financial health of banks, greater demand from end-users, and the effective implementation of government reforms will support the broader recovery of the residential market in H2 2021. In short, residential realty can look forward to a curved growth with both supply and demand soaring.
Lastly, your advice for RoofandFloor readers.
With all-time low-interest rates, flexible payment schemes, and lucrative discounts offered by the developers, this is the best time to buy a property.