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Are investors returning to real estate sector?
NEW DELHI: The investor is making a comeback in the real estate sector, if data are to be believed.
NEW DELHI: The investor is making a comeback in the real estate sector, if data are to be believed.
After driving almost 50% of residential unit sales till 2013-14, they virtually vanished as the real estate sector got into a financial freeze. According to PropTiger India’s Realty Report for 2015-16, the January-March quarter saw only 3% sales coming from the investors.
But the trend is changing. Sales from investors inched up to approximately 10% during the April-June quarter of 2016, PropTiger found.
With a revival in investor interest, the inventory hangover, or the estimated time needed to sell piled-up stock, has also reduced from 38 months during January-March 2016 to 35 months in April-June 2016.
Some of the main reasons that have led to the revival of investor interest include comfortable levels of pricing, good discounts and healthy economic indicators.
“The steady performance of the Indian rupee against major global currencies, moderating repo rate and controlled inflation have given a push to the purchasing power, thereby improving affordability. Developers are now focussing on speedy completion and delivery of projects,” said Sunil Mishra, chief business officer, PropTiger.
“With developers becoming flexible with payment plans and price points, not just the end users, but the investors have also realised that this is a good time to invest in the market,” said AS Sivaramakrishnan, head, residential services, CBRE South Asia.
Industry experts say sales are likely to improve in the months to come as the festive season approaches.
Launches also witnessed a quarter-on-quarter rise of 14% in the first quarter of 2016-17 against a fall of 14% in the fourth quarter of 2015-16. Launches had declined to almost zero in the past. Interestingly, affordable housing segment accounted for over 50% of the total launches, reflecting the impact of the recent incentives offered by the government to the developers.
Besides, in order to reduce risk, investors are picking developers that are backed with strong corporate integrity, such as Godrej, Lodha, Tata Value Homes, Tata Housing, Prestige, Supertech, Brigade, Kolte Patil, Sobha, Artha, and Mahindra Lifespaces, among others.
Some of the favourite locations for investors, experts say, include localities such as Gurgaon, some parts of Mumbai, Ahmedabad and Hyderabad. .
“The biggest advantage of investing in a home developed by an established real estate company is the surety of project delivery and business ethics,” said Brotin Banerjee, managing director and CEO, Tata Housing.
