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New year, new home? See what the markets say

Experts believe that 2018 will bring more affordable housing, greater transparency and accountability in construction and more investment.

real estate Updated: Jan 06, 2018 18:06 IST
Bindu Gopal Rao
(Illustration: Shrikrishna Patkar)

If 2017 seemed like a hard year in general, it was particularly tough on the housing market. The early months were spent coping with the effects of demonetisation – an absence of cash meant many deals were stalled or outright cancelled, both for buyers and builders. Then, policy changes kicked in, bringing their own complications – everyone had their hands full understanding the Real Estate (Regulation and Development) Act and Goods and Services Tax. The state’s housing lottery saw less public interest than before – citizens were put off by high prices and out-of-the-way locations. If you did manage to buy or sell a home last year, you were one of the lucky ones.

The new year brings hope to the market. Policies have been understood and implemented. There are new projects and new ideas under way. Will this year break the spell? Take a look:

The push: Affordable housing

New launches in the affordable housing segment have seen a jump of 27 percent, with Mumbai taking the lead. This follows the government’s decision to give the asset class infrastructure status, says an eight-city report by Cushman & Wakefield.

Aniket Haware, managing director of Haware Builders says that in India’s top eight property markets, sales have increased 5% in the quarter ending September 2017. “Much of this was powered by a 24% surge in affordable housing,” he says. “This is due to the central government’s schemes like Pradhan Mantri Awas Yojana.” Amit Ruparel, managing director of Ruparel Realty hopes that the new industry status for affordable housing will mean a steady rise in demand in the coming year. “From the investor’s perspective, affordable apartments are easier and more profitable to sell or rent out, which helps assure a reliable return on investment,” he says.

The impact: RERA and REITs

Real estate investment trusts (REITs) or financial instruments that let you invest in real estate without buying it, seem to be a boon. Rahul Nahar, founder of Xrbia Developers hopes that the increased transparency and accountability it brings will benefit housing developers, as well as home buyers. “The act could go long way in restoring the broken relationship between developers and consumers,” he says.

But Sachin Sandhir, global MD of emerging business at RICS warns that while the environment for REITs is conducive, we have not seen any REIT listing yet. “Estimates suggest that around $121 billion of commercial real estate across office, retail and warehouse segments could potentially benefit from REITs,” he says. “We could perhaps see a REIT listing next year. Pricing them at a level that is attractive for investors will be the key to their success.”

The upgrade: Cool amenities

Developers have long strived to create properties that balance the essentials with attractive add-ons. An on-site gymnasium, children’s play area, CCTV security and intercoms is now considered standard. In metros like Mumbai, frills are costlier, but fringe suburbs now have wooded zones and classrooms too. Ram Walase, MD and CEO at VBHC says that amenities walk the fine line between aspiration and affordability. “Customers are highly value driven and, with more awareness, are capable of making the right choice.”

Sankey Prasad, founder chairman and MD of Synergy Property Development Services believes rainwater harvesting is a much overlooked amenity. “The municipal corporation plans to make rainwater harvesting mandatory for properties larger than 500 sq mts,” he says. “It can be one of the most sensible long-term solutions to Mumbai’s water scarcity issues.”

The essentials: Smart infrastructure

Even the best-designed property will fail if it is not connected to civic amenities or is hard to access. Mumbai is not yet on the smart city list, but there is certainly much to be done in terms of making it more liveable. Amit Wadhwani, director at Sai Estate Consultants says Mumbai’s residents deserve “a proficient and reliable infrastructure, enhanced and smart quality living and economic opportunities.”

The state government’s infrastructure projects include the Mumbai Trans-Harbor Link (MTHL) which will better connect areas in the east. New Metro lines, flyovers and the coastal road will offer better mobility. A tunnel linking Borivli and Thane and ferry services are also planned. “The Pinjal River link will supply drinking water to the Mumbai metropolitan Region in the future,” says Niranjan Hiranandani, CMD of Hiranandani Communities. “Developer’s need to be more conscious and responsible towards integrating sewage and waste treatment plants, rain water harvesting, recycling waste, high speed telecommunication and internet connectivity in their plans.”

The urgency: Safer construction

Data from the National Crime Records Bureau (NCRB) shows that more than 14,000 people died in dilapidated building collapses between 2010 and 2015. Pakshal Sanghvi, director of Sanghvi Realty stresses the need for stringent checks so buildings don’t just look good but withstand natural calamities too. “Some buyers are self-testing by checking the concrete mix, getting architects to assess the structure design and plaster and wall thickness,’ he says. In addition RERA-compliant projects have to issue a 5-year warranty for the building quality.

The government has been favouring cement (concrete) over bitumen (asphalt) for road construction since 2014. “tar erodes in a few months, which is why Mumbai is plagued with potholes,” says Anuj Puri, chairman of Anarock Property Consultants. “Concrete roads require less maintenance and weather Mumbai’s rain better. They also resist oil and lubricant spills.”

Ashok Mohanani, chairman of Ekta World and vice-president at Naredco West says town planning is the need of the hour – taking healthcare, drainage and sewage treatment into account. “The city should operate on the latest information and green technology to improve the standard of living.”