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Real Estate: No great expectations

Will 2016 be able to pull the real estate sector out of its slumber? Although the situation is set to improve, a repeat of the golden run of 2010-2012 is unlikely.

  • December 30, 2015  
  • |  
  • UPDATED   16:13 IST

Price outlook

  • Property prices have more or less remained stagnant over the years, and the trend will continue over the next two-three quarters.
  • According to JLL, a real estate consultancy firm, in the last four quarters, property prices increased by 3.7 per cent in Mumbai and 1.5 per cent in Chennai while Delhi-NCR did not record any change in prices.
  • Those who are looking to make a quick profit should not invest in property.
  • Commercial market is, however, showing signs of revival. But it is yet to be seen if it will have a trickle-down effect on the residential segment.
Unsold inventory
  • Unsold inventory is a key indicator. Rising level of inventory indicates a lack of demand in the market.
  • 2016 will not be very different in terms of unsold inventory pressure the top cities are facing. However, according to a few experts, the second half of 2016 may see some improvement.
  • Lack of buying interest has impacted property prices too. As a result, prices have remained stagnant or declined across all major cities. Experts are hopeful of the situation improving through the year.
  • According to a research report by PropTiger, an online real estate advisor, in the first quarter of FY 2015-16 sales tanked by 18 per cent across nine cities-Ahmedabad, Bengaluru, Chennai, Gurgaon, Hyderabad, Kolkata, Mumbai, Noida and Pune.
New launch
  • With investors preferring financial assets over physical assets, the pace of project launches has slackened. The trend is expected to continue in 2016.
  • According to a recent report by Knight Frank, the number of new project launches in the NCR stood at 11,360 units in the first half of 2015, a 68 per cent drop against the same period in 2014.
  • The report further states that residential projects under the Haryana government's affordable housing policy of 2013 contributed significantly to the new launches in the NCR in the first half of 2015. Approximately 43 per cent of the total new launches fall under this category.
  • Focus of developers is now on making real estate more affordable. Carpet area of several projects has been reduced to make housing cheaper.
  • 2016 may not be a good year to invest in real estate, but for end-users it is certainly the right time.