According
to reports of industry experts, the New Year 2016 shows signs of an uphill real
estate market trend. Though slow, a positive sentiment is building in the
industry attributed to the policy initiatives taken by the Government to bring
back the real estate trends on track.
Introduction of Policy Measures
The
introduction of various projects like the Smart Cities scheme, Housing for all
by 2022, promise of 24/7 electricity for all, and various other infrastructure developmental
schemes promise to have a positive impact on the real estate sector. On the
other hand, the approval of amendments to ‘The Real Estate (Regulation and
Development) Bill, 2013’ and the Real Estate Investment Trusts (REITs) will make
a set up for transparency in the sector.
With
the current repo rate of 6.75%, there is scope for banks to reduce the lending
rate to home buyers. This, coupled with lower EMIs, price reduction and
discounts by the developers to clear their inventory stocks, invites end user
home buyers as well as long term investors to buy property in 2016. With
property prices expected to increase in the last quarter of 2016 and the rupee
trading at an all-time low, NRIs can get a good exchange rate on the US dollar and
make a profitable investment in the Indian real estate industry. Now is a
conducive time to capitalise on the good exchange rate and favourable market
condition in India.
Renewed FDI Norms
Relaxed
foreign direct investment (FDI) norms will be a boon to the real estate
industry in 2016. Along with investments, fresh ideas, knowledge, skilled
labour and employment generation will be fuelled to the economy. It is expected
to impact more than 30 sectors apart from the real estate industry. Thus, it is
expected to give the much needed push to India’s affordable housing plans.
Commercial Space Scenario
The
year 2015 saw optimistic growth activities and a mixed absorption pattern of
old and new office space driven by IT and ITeS, e-commerce, consulting and
start-up firms which is expected to grow stronger this year. Rents in 2015 rose
at a faster stride in secondary and peripheral business cities than in the
first tier, central business cities. The small scale markets showing more
leasing activities in various cities in 2015 will continue to do so in the year
2016. A whooping 32 million sq. ft. net office space absorption is estimated
this year, mostly by large IT occupiers. It will have a rub-off effect on the
residential segments.
On
the whole, 2016 is the much awaited year of transformation for the Indian real
estate industry with the introduction of REITs and Smart Cities project,
approval of amendments to the Real Estate Bill and the relaxed FDI norms.