With high property prices and costlier borrowing hitting real estate , developers are hoping for a reversal of the slowdown in the new year and sales picking up post general elections.
Low demand for flats, subdued commercial leasing, huge unsold housing stocks , buyers' protest against delays, limited launch of projects and debt-ridden developers clocking lower revenue-net profit numbers marked the year for real estate.
Amid these negativities, there were two major government initiatives in form of new land acquisition Act and proposed real estate regulatory bill that would go a long way in making the real estate sector more transparent and accountable.
Developers, however, kept complaining that the provisions were pro-farmer and consumer-friendly, leading to further delay in development of projects and price escalation.
Cash-strapped industry, however, cheered market regulator Securities and Exchange Board of India 's (Sebi) draft guidelines to allow Real Estate Investment Trusts (REITs) and Commerce Ministry's proposal to relax FDI norms as it felt that these steps, once implemented, will help revive the global investors interest in a sluggish property market.
The year also saw some some big-ticket deals. Mumbai- based Lodha Developers acquired iconic Macdonald House in central London for over 300 million pounds (over Rs 3,000 crore).
Realty firm DLF sold its wind turbine projects in Gujarat, Rajasthan, Karnataka and Tamil Nadu in phases for about Rs 800 crore. It also exited from insurance venture by selling 74 per cent stake in the joint venture DLF Pramerica Life Insurance to DHFL for an estimated Rs 250-300 crore.
"It was one of the worst years in last two decades not only because of slowdown, but weakness of governance at all level from central to state to corporation levels," CREDAI, the apex realtors' body, Chairman Lalit Kumar Jain told PTI.
Noting that market improved during December, Jain said: "2014 would be year of revival. Revival has started, the visible change would be seen from second half".
While reviewing yearly performance, property consultant Jones Lang LaSalle India said: "Over the last four years (from the trough of Q2-2009 up to Q3-2013), taking into account the period of economic slowdown, apartment prices have risen by over 50 per cent on an average across India. As a result, absorption remained subdued during 2013 (until Q3, 2013), falling further from the already tepid levels observed during the same period last year".
Poor housing demand meant that developers had to sit on a huge unsold stocks and postpone new supply, as reflected in 12 per cent drop in launch of new projects during 2013. Still average housing prices rose by 10 per cent across India.
With investors shying away from the housing market, it was a buyer?s market this year but they largely chose to wait and watch for prices to correct and interest rates to ease.
By end of the year, both did not happen. While developers kept holding on to their prices citing rising input costs, the Reserve Bank of India did not get enough elbow room to reduce interest rates because of high inflation.
Developers' strategy to focus on execution of the existing projects and selling the non-core assets to improve cash-flows continued even during 2013.
Demand slowdown was not limited to housing. Leasing of commercial spaces remained muted as corporates were cautious in expansion amid weak global economic conditions.
According to Cushman & Wakefield, the net office absorption fell by 25 per cent in 2013 to 23 million sq ft in eight major cities. Office space supply also declined by 14 per cent to 34 million sq ft.
Attractive valuation of rental-yielding commercial assets did provide a golden opportunity for private equity players whose investments in the realty sector grew by 26 per cent to Rs 4,716 crore in the first nine months of this year.
The Government did try its bit to improve the market. In the beginning of this year, tax sops were offered in Budget to boost demand for affordable housing, but luxury homes were made expensive to compensate.
An additional interest deduction of Rs 1 lakh to first home buyers for loan up to Rs 25 lakh was announced. Not only that a Rs 2,000 crore Urban Housing Fund was set up, the outlay for Rural Housing Fund was increased to reduce housing shortage estimated at about 19 million units.
On the flip side, a TDS of 1 per cent was levied on the value of the transfer of immovable property valued over Rs 50 lakh.
During second half, new land acquisition law was passed in Parliament. It stipulates consent of at least 70 per cent for acquiring land for public-private-partnership projects and 80 per cent for acquiring land for private companies.
Amid buyers' complaints of delay in project completion, government also introduced the Real Estate (Regulation and Development) Bill 2013 that seeks to protect consumers from fly-by-night operators and unfair practice.
Developers were up in arms against this proposed law saying that Regulatory Bill does not cover all stakeholders involved in the real estate development like the government authorities, which gives projects approval.
Ministry for Housing and Urban Poverty Alleviation tried to convince builders that the Bill is not anti-industry but to no avail. Finally, the Centre assured that the Bill would be suitably modified if necessary.