Further correction expected this year

Tags: Real Estate
Real sector experts are making predictions that are music to ears, as far as the buyers are concerned.

Financial year 2018, they insist, will witness correction in property prices, making this the best time to buy - before rates go up once again.

There is more. The real estate market in the first half of 2017 would be buyer-dominated.

In the second half of the year, they say, the sector will begin to steadily adjust to the new rules and regulations and the prices would increase owing to the rise in the end-user demand.

Says Surendra Hiranandani, chairman and managing director, House of Hiranandani: “From the real estate perspective, the first half of 2017 will certainly be a buyers’ market as the industry begins to adjust to the new norms. It is difficult to negotiate prices for the developers at this point in time, as the margins are very slim, but once the cycle sets in, the prices will gradually increase owing to the rise in demand for properties.”

Sectoral leaders believe that the

era of lower property prices is about to get over soon. With higher price margins, negotiations will increase

and consumers could fetch excellent deals in the market, as most developers will look at selling existing inventory. This could prove to be the big demand trigger.

Hiranandani, one of the country’s premier developers, adds that since 2010 there has been a lot of pain in the market and developers sold real estate at low prices. Along with this, severe inflation made a bad situation worse. In other words, a pile up of unsold inventories and incomplete projects.

“Construction and approval costs spiraled out of control. This was coupled with high interest rate, as borrowings are essential for construction of projects. Most projects sold in that period resulted in heavy losses on the balance sheets of developers,” he points out.

Manoj Chaudhary, MD of Airwil Infra, too predicts that against the last few years, “we are predicting that property prices will rise this year. The implementation of GST and Rera will further fuel demand.”

Quoting an example of the Noida market, he points out the region witnessed an overall price correction of about 10-15 per cent in the last 2-3 years.

“This situation is expected to change very soon, as we have entered the phase of deliveries and new launches,” explains Chaudhary.

The second half of 2016 saw a 15 per cent reduction in circle rates of the Gurgaon market. "This led to a final price correction of only 2-3 per cent," says Deepak Kapoor, president CREDAI - western UP and director of Gulshan Homz.

In addition, other major realty markets in NCR are gearing up to witness the revamped realty sector by the third quarter of FY18, which will allow the prices to pick up pace.

Good pricing, obviously leads to new launches and re-launches, which are all set to get a momentum.

“Demand for available inventory and ready to move in homes will act as a catalyst. Rise in demand will ensure that prices remain firm and start the ascent once again,” says a developer.

So what will keep business sentiments in the commercial domain healthy, ensuring better balance sheets in the next two quarters?

CREIndia CEO Ajay Rakheja predicts, “With limited supply of Grade A and quality deliveries, the demand for leasing will grow to 5-7 per cent in metros’ secondary districts. The cap values, by and large, will remain stable and might get deals on the circle rates at locations with high supply.”

However, one downside is also evident. The changing dynamics of the Indian economy and the regulations in place could also mean that cash-driven transactions will reduce substantially.

shishirparasher@mydigitalfc.com

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