Nightmare of 2012 and expectations from 2013

Year 2012 was a nightmare for realty market and may 2013 will bring some good news.  Throughout the year realty market has suffered a lot due to severe rules introduced by government and more than 10times changes in RBI’s credit policy realtors are setback.

Similarly, entire housing driven economy has taken a setback resulting in loss of revenue to government (central and state, LUBs). This particularly affected local Urban Bodies (LUBs) in carrying out developmental works in respective cities. The governments are trying to recover revenue through higher taxes and   premiums which will be counterproductive and is resulting in the price escalations. The governments including bureaucracy has preferred to avoid taking decisions in Real Estate Sector due to avoid controversies which further resulted in slow down and price increase due to shortages. The business mathematics has gone wrong for most developers and this ultimately affects consumer as well as governments. Adding to fuel to fire Govt has reserved the 20% quota for Economically Weaker Section in every luxury projects introduced by the developers.

According to the several research reports have reported huge plunges in Indian housing prices, less demand and more supply brings the realty economy down and down. Even though Mumbai, Delhi, Bangalore and Pune biggest realty market suffering through the same crisis, reports said.

Contrary to 2012 realtors as well as market players are expecting more absorption in current fiscal year comparatively previous one. In this crisis only new DCR regulation have brought some hope for realtors, further 2013 will see more projects launch on schedule, with an implied assurance that developers will focus on meeting the committed timelines. Given the increased demand, the high prices of land and the significant increase in construction costs, 2013 will not bring any major correction. Though the question of what the State Government will do in terms of providing the infrastructure required to support the increasing population, the inherent demand for residential space in Mumbai will remain strong in 2013.

As far as absorption concern in commercial properties in 2013 will be at the lowest. On the other hand whereas govt has given severe injuries to realty sector also has good news by introducing 51% in Foreign Direct Investment (FDI). Realtors’ body has hailed the 51% FDI as it will bring several foreign realty investors are all set to implement their expansion plans in the metros.  FDI in retail will open fresh avenues. High street will continue to grow and give a tough competition to malls. Vacancy levels in malls will depend on the amenities and infrastructure that the mall offers. Superior malls will have lower vacancy than the inferior ones. Rentals will get a push in superior malls.

Despite all this Realtors’ body also lined up number of property expos in Mumbai and in suburban areas to heal the realty wounds.