6 Trends that will Define Indian Real Estate in 2017

With 2016 coming to an end, it’s time to retrospect some major events that impacted the sector last year and, more importantly, are set to define Indian realty in 2017. Few game-changing policies like RERA and GST are likely to be fully implemented in the new year and we may witness its ‘real’ benefits. Also, the demonetization drive created ripples in the short-term for the already reeling realty sector. But, whether these events will change the future course of the Indian real estate sector or not, only time can tell.

Meanwhile, let’s take a close look at some of the trends that are likely to define Indian real estate in 2017.

Inventory Overhang to Reduce in 2017

New launches across major metros took a backseat in 2016. Market data clearly indicates that we are seeing major consolidation in Indian residential market with developers largely focusing on completion of their earlier launched projects rather than bringing in new supply.

As per JLL, for the first time since 2008, the supply of new apartment units was less as compared to those sold during the first three quarters this year. In fact, in Q3 2016, the number of apartments sold pan-India exceeded new launches by more than 10,000 units. This clearly points towards a new reality – markets are maturing and developers are cautious. Ultimately, the decreasing number of launches will gradually help in reducing inventory levels across cities.

In terms of numbers, in Q3 2015, nearly 86,000 units were launched across eight major cities. This number drastically reduced to 39,500 units in same period in 2016. The implementation phases of RERA has brought tight constraints to the residential real estate industry revealing a large fall in new launches this year. More stringent policy frameworks on the table are likely to reduce these numbers further next year.

Sector will see major Consolidation

Much to the delight of consumers and the sector at large, realty sector is heading towards a major consolidation activity during 2017. Smaller developers following unscrupulous activities will either become a thing of the past or merge with stronger players to become more efficient and transparent. Delhi-NCR, for instance, has already seen tie-ups between smaller and branded players to implement joint development projects. In the wake of several policy game-changers including RERA, Benami Properties Act, among others, smaller players will thus find it increasingly tough to survive without a big daddy.

Affordable Housing to Rule the Roost

The year 2017 is likely to be dominated by affordable housing projects. The government has left no stone unturned to boost affordable housing by announcing various sops all through last year. More so, it’s an effort to fulfil their vision of “Housing for All by 2022.” Meanwhile, several leading developers are also exploring the opportunities underlying affordable segment and have ventured into it by launching several projects over the year. They have rightly understood that “affordability” is the new mantra for success in real estate.

The recent demonetisation drive will also boost affordable housing because land prices are likely to plummet over a period especially in far-flung areas of the metros and in Tier 2 and 3 cities. Since most land dealings are done in cash, demonetisation will eventually prompt land prices to fall.

Interestingly, the government’s interest subvention schemes announced on New Year’s Eve will further boost this segment. Adding further cheer to home borrowers, several banks also lowered their interest rates. All these moves are a positive sign for the sector at large.

Consumer faith to be strengthened

Initiatives such as RERA, Benami Properties Act and demonetization, among others, have already begun to change the entire perception of the real estate sector. With full implementation of these measures during this year, one will witness increased transparency, efficiency and professionalism within the realty sector. This will further strengthen home buyers’ confidence who have often been demotivated by the unscrupulous doings of few developers.

Ready-to-move-in supply will see more buyers

While the real estate sector is on a path to recovery and becoming more transparent, first-time home buyers will prefer ready-to-move-in properties across metros and even in Tier 2 and 3 cities. Interestingly, consumers’ risk-appetite over the past few years has significantly gone down in the wake of several project delays and unscrupulous dealings of few developers. Therefore, they prefer to buy ready-to-move-in properties or those expected to be ready within six months.

On the supply front, developers in 2016 had essentially been focussing on completion of their previously launched projects as against launching new ones. For instance, if we consider market data then Delhi-NCR alone is expected to see ready-to-move-in supply of more than 3,50,000 units in 2017. These units have been launched sometime over the past 2-4 years. And, from the buyers’ perspective, they are willing to buy at a higher cost than invest in projects that they feel will be delayed

Real Estate sector goes Digital!

In the current era of technology and the prevalence of different social media platforms, realty players have recognized the importance of digital marketing. With rapid Internet penetration into smaller towns and cities, the need to go digital has clearly been defined. Realising the immense potential of digital marketing, several developers and sellers have already begun planning their advertising spend on it.

All said and done, an era has just begun wherein consumers are king. More importantly, the actual end-users will be the biggest gainers in 2017.

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