The Real Estate Market is Hoping For a Turnaround in 2014!

The Indian real estate market has been blindly aping strategies and trends all throughout the last three years. The market or the decision makers at the top have not really offered much support to this sector. However, there is a strong undercurrent of optimism among market czars with regard to a turnaround and improvement in fortunes this year. Why is this so? Cynics point at the fact that not much has really changed with regard to the problems and issues plaguing the sector as another year kicks off in full swing. However, there have been policies and other decisions that may just augur well for the sector and put it on the right track as far as recovering from the slump is concerned. 

The last budget prepared before the Lok Sabha Elections also heralded promise with regard to acknowledging the fact that real estate and housing are pillars of the economy and would play pivotal roles in its growth. All of this has led to a general belief and hope in the real estate industry with regard to putting the worst behind and starting afresh. Will this really be a year of strong revival? While this cannot be properly ascertained as of yet, there are signs that look promising to say the least. These reasons have been doubted and questioned by countless critics and market commentators. They harp on the impossibility of total revival in 2014, especially when it is an election year. This factor alone would slow down all processes of approval and also derail sanctions, licenses and other clearances. Alongside, critics also point to the attitude of the Governor at the Reserve Bank of India with regard to controlling inflation.

Alongside, there is really no definite clarity with regard to a stable government placed at the Centre after the elections get over. However, such pessimism, though natural, has not really found takers among real estate companies and biggies in this sector along with governmental agencies who are pinning their hopes on 2014 in a big way. There are various reasons which are making industry players believe in the upcoming turnaround. Companies are gearing up for a smoother ride ahead. The crisis has been taken care of, as per industry experts and the global slowdown has finally receded from the Indian real estate market according to them.

According to many economists and other experts, the Government will have no way out other than acceptance when it comes to taking note of the needs and requirements of the real estate sector which are legitimate and pressing to say the least. The economy needs a shot in the arm and this can only be done courtesy some assertive and positive real estate policies and decisions. The real estate sector is largely hopeful of the next budget being a positive development for the industry at large. According to Rahul Gaur, the Brys Group CMD, the first half of 2014 can be a little wayward and confusing before the elections get over but afterwards, there will be stable market sentiments to bank on. Everyone is hoping for a stable government at the Centre and this is being keenly prayed for by both real estate companies and financial institutions and banks among others.

According to Gaur, the first three quarters of the year 2013 witnessed higher PE investment in realty to the tune of 26 percent. If the REIT or the Real Estate Investment Trust becomes a reality within the next year, this will provide another funding outlet for the sector. This will also give a huge boost to investors in retail who would not have been able to purchase property normally. REIT, if it is allowed in India bereft of usual teething problems related to taxation, would definitely make for a more professional and transparent real estate industry functioning. Alongside, FDI in retail will also be drawing more investments right after the elections according to Gaur. With the introduction of the regulator for this sector, the image of real estate companies before global investors and other firms will definitely take a turn for the better.

There will be prompt and crisp functioning as opposed to the sheer absence of corporate governance and vague functioning present in the sector earlier. Alongside, the Land Acquisition Act will also ensure fair competition in the market and proper settlement of deals with owners of land. This will keep all trust deficits at bay and will definitely bring down protests and judicial cases which most often lead to the abandoning of prestigious projects. According to the RICS South Asia Managing Director, Sachin Sandhir, the last year was quite productive for the industry from a policy point of view. Governance was effective even though sales and revenue volumes left much to be desired.

According to Sandhir, there should still remain a viable market if sales still take place and that too, at a price point that is viable and affordable. He feels that this is a period when the government has no other option at its disposal but to properly compensate the real estate sector. He is not unduly worried about fluctuations in power and feels that real estate alone will be able to stabilize the Indian economy and is eagerly waiting like many others, for the next budget, which should herald this new turnaround in this sector. The global slump has worked wonders with regard to teaching valuable lessons to real estate companies and developers. They are now more conscious about pitching appropriate products in markets that are complementary and also at prices which are appropriate for the same.

Some realtors continued selling in spite of overall market problems. More and more luxury projects were actually sold out and this was a heartwarming development with regard to keeping hopes alive. As a result, this year should be the stage for the Indian real estate industry to bounce back from all the losses and problems faced courtesy some much needed governmental support. Here’s to more new projects ahead!