It was a yo-yo year for the realty sector

The realty sector survived the global slowdown in 2009 and is limping back to normalcy as the year draws to a close.

The realty sector survived the global slowdown in 2009 and is limping back to normalcy as the year draws to a close.

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With real estate rates dropping by 40 per cent developers, who were pursuing the luxury flats segment, shifted focus to the affordable housing segment.

“The future is affordable houses and no one can ignore that. The slowdown was a wake up call,” said Pranab Datta, Vice-Chairman, Knight Frank, a leading realty consultancy firm.

Affordable houses meant flats were resized to suit budgets. Frills like swimming polls and clubs were left out of glossy brochures. Places like Karjat, Navi Mumbai, Thane, Badlapur and Kalyan saw big developers like India Bulls, Marathon, Keystone, Lodha and Dosti Group launching affordable housing projects.

Until mid-year, most developers were in trouble forcing the central government to step in and announce three stimulus packages. One gave developers breathing space to reschedule loans, the other forced banks to ease lending rates and the third gave incentives to low cost houses.

Prices of commercial properties, however, stagnated and malls struggled to find traders. Shopping streets like Colaba Causeway and Linking Road also saw a significant decrease in rentals.

After July, the realty market picked up again and developers announced new projects. As the year progressed, prices once again began climbing steadily.

Towards the end of the year, developers became optimistic again and luxury housing projects were the new trend--Sky by India Bulls at Lower Parel promised a 24-hour butler service, Kumar Court at Prabhadevi had villas for Rs 25-30 crore and Orbit Terraces, Lower Parel offered an exclusive terrace for each flat. “The market works on demand and supply and I see nothing wrong in increasing prices,” said Subodh Runwal, Director, Runwal Group.

Rajendra Chaturvedi, director, Shreepati Constructions said the worst is over. “There is renewed interest and we are seeing foreign funding entering the market again,” he said.

Analysts are, however, worried about the indiscriminate increase in prices. “Unrealistic prices will only cause another slowdown and low sales,” said Anuj Puri, Chairman and Country Head, Jones Lang LaSalle Meghraj, a leading real estate consultancy firm. He said buyers will not succumb to excessive prices.

At a recent housing exhibition in Dubai, non-resident Indians rejected Mumbai’s realty prices calling them excessive and chose to focus on areas like Thane, Mira Road and Pune.