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Realty consultants and developers expect recovery in Indian market only in second half of 2014

03 January, 2014

Indian realty industry, which is reeling under mounting debt, lagging sales and yet witnessing an increase in prices leading some to pronounce it an asset bubble of properties, is expected to see headwinds continue for the first half of 2014.

Realtors, industry consultants and market experts indicate that they expect green shoots to be visible from H2 CY2014.

Anuj Puri, chairman and country head, Jones Lang LaSalle India, said, “Consumer confidence will remain subdued during the first two quarters of 2014, owing to uncertainties surrounding the general elections and macroeconomic condition. However, post the elections, fence-sitting investors are likely to become active.”

Though sales have been stagnant, developers indicate that they expect prices to head north during the second half of the year.

Gaurav Gupta, director, Omkar Realtors, said, “We have seen an increase in input costs, etc. which we have not been able to pass on to buyers but we are hoping once the new government comes in, things will look up and prices can go up.”

Analysts on the street expect the slowdown to continue during the first half of the year owing to elevated price levels and weak demand sentiment. The problems of various corners of the country have started to throw developers out of gear.

Sales have been falling drastically in Mumbai due to skyrocketing prices and new regulations hampering new project launches. In fact, in the past few weeks, sales have dipped to the lowest level in the last few years.

On the flip side, the commercial office space saw some positive undercurrent last year which is expected to intensify this year.

According to Ramesh Nair, COO – Business, Jones Lang LaSalle India, “Despite the uncertain economic conditions, absorption of office spaces in Mumbai rose 4.4 per cent to 7 million square feet in 2013,  against 6.7 million square feet in 2012. As a result, vacancy fell to 22.9 per cent in 2013 from 24 per cent in 2012.”

He said in the current year, the shortage of high-quality office space in Mumbai will intensify and the vacancy level will decline by 0.5-1 per cent. “Sub-markets will see the highest rise in stock of office space include the West Suburbs, SBD North and East Suburbs (in that order). The CBD, SBD-Central and Thane-Navi Mumbai will witness the least or very moderate growth in stock,” he said.

Meanwhile, Delhi National Capital Region (NCR), which has been an investors’ hotbed for the last few years, especially for the residential segment, also has seen transactions cool off due to oversupply and a rampant price increase.

The only region which had been clocking sales has been the southern region dominated by Bangalore and Chennai. But in the short term even these cities have witnessed flagging sales.

(Edited by Joby Puthuparampil Johnson)


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Realty consultants and developers expect recovery in Indian market only in second half of 2014

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