The year in realty

BRIGHT AND SHINY 2014 was a positive and eventful year for the real estate sector, thanks to the new government’s reforms. Experts believe that the same
optimism will continue through 2015 as well, writes Bindu Gopal Rao

The year 2014 had several realty highs and new policies that changed the face of the sector in more ways than one. Standard and Poor's raised the outlook for India's "BBB-minus" rating back to "stable" from "negative" in September, saying the country's government mandate and improved political setting
offered a conducive environment for reforms.

It brought in positive sentiments about Indian real estate among Indian and international investors in recent times, as the new government enthused the investor and business confidence in the Indian economy.

Spotlight on Bengaluru
The stabilisation of market was an important highlight. When the country as a whole was witnessing drop in demand, Bengaluru was the only market, which showed growth trend. The industry got started on a growth trajectory during late third quarter of this year.

Opines Suresh Hari, secretary, CREDAI Bengaluru, “The various steps to infuse new blood into the economic system of the country added to this impetus. Bengaluru saw increased commercial space absorption during the last quarter of 2014. This situation is likely to continue and will contribute to the
increased demand in residential segment also.”

Of late, this is a city of start-ups and there are numerous infrastructure development initiatives coming up. This makes the city perfect for both, commercial and residential real estate demands. Nimesh Bhandari, co-founder, director and chief executive officer, RealtyCompass.com

observes, “Bengaluru was one of the most resilient markets, where demand was
decent and lots of new projects were launched. We saw a significant progress in ready-to-move-in projects, which is what customers prefer these days.”

Defining factors
Policy changes have been a highlight, whether it has been revisiting the Land Acquisition Act, The Right to Fair Compensation and Transparency in Land
Acquisition, Rehabilitation and Resettlement Act or the regulatory bill as a tool to address deficiency in both, buyers and sellers. Taking a look at the major moves, Vinit Deo, chairman and managing director,

Posiview Consulting Pvt. Ltd. lists, “RBI decided to carve out a separate sub-sector called Commercial Real Estate – Residential Housing (CRE-RH) from the CRE
sector this year, as loans to the residential housing projects under the CRE sector
exhibit lesser risk and volatility than the CRE sector taken as a whole.

The government, intending to develop 100 'smart' cities, committed an initial amount of Rs 760 crores to meet its target.” He adds that formation of such cities will mobilise employment, development and create new real estate markets.

Advitiya Sharma, co-founder, Housing.com, is of the view that investment sentiments were at positive best in 2014, for a new breed of smaller first
generation entrepreneurs, from tech-
sector, contributed to the progress of real estate plots. Besides, most residential
developers were highly quality conscious.

Nimesh Bhandari reckons that 2014 was also the year of online realty. He says, “There was an evident shift in real estate marketing, from traditional medium to
online medium, as it became more efficient and started giving better return on investment. E-commerce for real estate took off very well in 2014, as people were willing to buy houses at the click of a button!”

Number crunching
Several big ticket projects took off this year and development of projects - residential and commercial - are in full swing. Rajiv Mohan, managing director, Cherry Hill Interiors Limited, says, “We noticed that 2014 witnessed an incremental demand of 15 per cent, over 2013, for real estate space.

While the demand was somewhat stagnant in Delhi-NCR, early signs of steady growth in real estate came very strongly from Bengaluru, due to increased activity around IT and ITES services.

The city continued to be highest contributor to real estate land take-up in the third quarter of 2014, contributing close to 30 per cent demand of space, across seven cities in India. The commercial real estate space witnessed some surge in demand owing to improving global sentiments and domestic macroeconomic indicators.”

“However, in the last few years, a lot of demand in commercial and office space has been coming from tier II and III cities, like Lucknow, Chandigarh and the like.

These markets have evolved over the years and opportunities in the service sector have been immense. These cities offer skilled and cheap manpower and therefore IT companies, banks and retailers have been very positive about these markets,” says Mohit Goel, CEO, Omaxe Limited.

Adds Anubhav Jain, director, Silverglades, “Companies are looking at India again as investment option and with development of infrastructure in tier II and III cities, we have seen increased demand in commercial real estate sector.

These cities hold the key to the future for real estate sector as IT/ITES, retail and manufacturing industries are setting up in these cities due to variety of reasons like cheap manpower and availability of land, to name some. We have seen residential projects by many developers coming up in these cities in the past few years and with increasing demand this trend will continue.”

Dr R Kumar, managing director, Navin’s Housing Pvt. Ltd. believes that given the FDI norms that have been relaxed, affordability redefined, and economic revival
expected by the introduction of Goods & Services Tax (GST) and other such
reforms, the real estate market is sure to continue enjoying positivity and progress in 2015 as well.