Hope of Deliverance – Realty Sector

The Indian Property market needs a shot in the arm in a lot of respects and the first one has just come as a “Hope”, that Mr.Narendra Modi the most favorite Indian Citizen Today in the world is going to become the Prime Minister of India.

On a micro level in the country, what is it in for a Home Buyer going forward. A few of the agendas, which will carve the road ahead in realty sector are as follows:

1. Central Government Pro Housing Policies and Taxation

2. Banking Reforms providing lower interest rate for Housing Sector

3. Grass Root Level Micro Reforms, which will cut through the Red Tape for construction industry

4. Infrastructure Development with impetus on Stronger Roads, better connectivity with Metros and other infrastructure speedways projects

5. Strengthening Governance and Creating an Environment for better Economic Development

These are typical wish lists from any Government and perhaps the faith this time around is far greater with Mr.Modi being the PM for fulfilling the desires of an Indian.

As far as the Real Estate Sector goes, the Mumbai Property Market is likely to go through a sea of change and hopefully for good. The average homebuyer needs security for his money and delivery of the promised home and that is the essence of his story.

The time has come for the Indian Real Estate Sector to go through radical changes, which may need a total transfusion, overhaul and simplification of Housing Policies and Construction Laws. Once the policies are simplified and consumer confidence gets back, then there is no stopping for the real estate sector. But for this, one needs a clear vision and clear-cut policies to induce growth.

Real Estate is a Mother of all Industries and at this stage to say anything about price corrections or appreciation will be purely speculative.

The Current situation in Mumbai Metropolitan Region seems to be positive on the wake of the election results, but Mumbai’s diversified population and its absolutely imbalanced infrastructure surely needs a lot of doing and the New Government must take radical steps to ease the pains of home buyers.

Mumbai Property Rates

Mumbai Residential Market Analysis and Predictions: 2014 and 2015

It is absolutely impossible to predict what is in store for the Real Estate Market in the Year 2014 – 2015.

The market largely will depend on the following key factors:

  1. Political Results of the General Election in 2014.
  2. Government Policies to boost the Real Estate Sector
  3. State Government Policies on New DCR, Redevelopment, SRA and FSI
  4. Infrastructure Impact across Mumbai Metropolitan Region
  5. Dollar vs Rupee Valuation
  6. REIT
  7. Role of MMRDA and MHADA in the Real Estate Housing Sector
  8. Affordable Housing Policy of the Government
  9. Stock Market Performance – Both Bull and Bear phases.

Apart from the above, one has to keep a watchful eye on the Demand and Supply in the Micro Markets across Mumbai Metropolitan Region.

In the past 2 years, there have been a lot of New Launches of Real Estate Large Projects by various Top and Middle Range Developers in South Mumbai – Central Mumbai – Western Mumbai – Western Suburbs Extended.

It has been largely seen that there is a parity of Construction Quality, Project Amenities and Configurations. Even then, the prices are different in various developments primarily due to the sales strategies of the Developers based on land holding.

For Example : Lodha – The Park was launched at very competitive price in Worli and the Developer wanted to sell maximum units in the Launch Phase.

The holding capacity of the Developer and his sales strategy, acquisition costs, competition pressure, Premium on a Brand, Amenities in the project, FSI Calculations play a very important role in market dynamics.

If the Political unrest prevails, then we will see a subdued market till the sentiments increase.

If a firm Government comes with pleasing policies then the markets will remain strong. Strong really does not mean here, that the Prices will go up very high, but yes, the fence sitters and investors will surely come back in anticipation of higher returns on the back of a stable economy with better governance.

There are at least 200 Project launches expected in the entire MMR region in the year 2014 of Top Developers.

Year 2014 / 2015 will be the year when one will see a lot of Mergers and Acquisitions and Joint Ventures between Developers Rich in Land Banks and Developers with efficient and new age marketing strategies and a strong goodwill/brand.

The First Home buyers/Investors are not confident of timely delivery of New Projects and going forward Construction Linked Payment Plans, funded with Banks and Structured deals would play a bigger role in Sales, than the conventional sales ideas.

Innovation, Strategic Planning with keeping consumer interest in all respects will be the key drivers for generating better sales.

It would be advisable for Developers to launch the Project with full IOD, CC and other relevant permissions and Bank Loans than on Soft Launches without.

The Year on Year returns are expected to be in the range of 8 to 12%. A lot of this will vary based on infrastructure impact on Locations.

Mumbai by the (First Quarter – Second Quarter) may see the following infrastructure projects getting ready which will surely play a role in Micro Markets like Andheri East, Ghatkopar, Chembur, Lower Parel, Wadala and Thane.

  1. Mumbai Metro – Ghatkopar to Versova – Pending
  2. Santacruz – Chembur Link Road – Done
  3. Dual Carriage way at Thane to Balkum – Partially Opened
  4. Free way extension to Ghatkopar – Pending
  5. Bridge over Western Express Highway at Kala Nagar – October 2014

All these aspects will play a huge role in Capital Appreciation, Commercial office spaces, New launches going through 2015.

A few projects which are now pending and are in the pipe line are:

  1. Ghatkopar – Koparkhairane – Sea Link – which will boost Dombivali-Kalyan connectivity from Eastern Express Highway.
  2. Andheri West – Jogeshwari Highway Connectivity.
  3. Ram Mandir Road – Goregaon to Highway connectivity.
  4. Monorail – Wadala – Lower Parel connectivity.

Any large infrastructure plan for the city of Mumbai to ease traffic and build connectivity will directly result in price appreciation in real estate.

Article – Written By Sandeep Sadh.