The government has introduced some structural changes in the real estate sector in the years 2016 and 2017, by way of legislation and administrative measures. Consequently, the year 2018 witnessed the confidence of buyers getting a boost, with which they came back to the real estate market zealously after being indecisive for a few years. The following are some of the interesting trends that emerged in the sector:
1. Mid-market becomes mainstay of housing sales- housing units priced between Rs. 20-50 lakh drove the sales in the Residential Real Estate segment and emerged to be the mainstay of ales in 2018. That developers have altered their product portfolio and accommodated more and more of these houses can be attributed to the fact that there have been good sales volumes for houses in this price bracket. Since this segment has always recorded the bulky of the share in housing demand, developers are now on their toes, aligning their offerings with demand realities.
2. Compact sizes are in- the year 2018 saw a clear shift amongst developers from waste to judicious use of spaces. The projects launched by developers had smaller apartments and much better space utilization. Though the salable area of houses offered by the developers has been significantly reduced, the carpet area in those flats have remained the same, or dropped just marginally as compared to previous years. This implies that developers are now exhibiting enhanced efficiency in design and construction.
3. Move towards organized play- the year 2018 was also largely governed by landmark partnership deals in the real estate sector. A spurt has been noticed in the number of joint development agreements (JDA) where smaller builders who lad land parcels with them, entered into collaborations with big players of the real estate sector with years of development and marketing experience.
4. Judicial and regulatory intervention- the judiciary as well as the government got stricter with real estate developers and handed out some of the toughest verdicts in 2018, thanks to false commitments to buyers and slow progress of the projects that had ailed the industry since time immemorial. Be it stiff momentary fines or jail terms, developers being arrested straight from the court, and so on- the punishments were stringent. They were given out either by the apex court or the consumer forums across the country. Furthermore, the Enforcement Directorate also joined in and sized some of the properties of errant real estate developers this has incorporated a decent degree of discipline into the system and have restored the confidence of the property buyers on the Real Estate Market.
5. NBFC scare- the non-banking financial companies (NBFCs) have come as a huge relief to the real estate developers by acting as a major alternative to bank credit. These institutions in recent years, have been lending handsomely to the developers. However, in the last quarter of 2018, the NBFCs suffered a huge liquidity crisis, which kicked off with IL&FS and gradually grew to be an alarming issue for the entire industry. Consequently, the real estate industry was also threatened. Even customers had to bear the brunt in the form of lower home loan disbursals. Thanks to fast prompt government intervention, the crisis has been tackled well and currently, NBFCs seem to be at a stable position.
The traits that emerged in 2018 are expected to assume more prominence in 2019, especially trends such as mid-market housing category that dominate sales, bigger Real Estate Brands that claim dominance in the market, developers manifesting heightened efficiency in layout and administration turning out to be stricter with developers. Developers will also show more compliance to RERA and buyers will have more information at their disposal, courtesy them. The growth momentum whose seeds were planted in 2018 will reap its finest in the coming year.
Square Yards is a technology-enabled, global real estate aggregator and India’s largest player for primary residential real estate. It’s subsidiary Square Capital is one of the largest marketplace for secured mortgages in India. Square Yards platform offers an integrated consumer experience & covers the full real-estate journey from search, discovery to research, transactions, home loans and post-sales service – fully integrating buyers to an extensive network of 500+ partner real estate developers, and 90+ banks & NBFCs. Square Yards is led by accomplished professionals, ex-bankers, and Ivy school alumni and is backed by the competence of more than 2500 employees in 30 cities and ten countries.