Realty In 2013: Will The Sector See Little Hope?

Bangalore: Last year has been a challenging year both for developers and home buyers. According to market analysts, certain issues which the real estate market witnessed in 2011 may continue this year as well because Delhi-NCR and Mumbai Metropolitan Region (MMR), the two traditional leading property markets in India are struggling with less home sales due to unaffordable property prices, reports Madhurima Nandy and Unnikrishnan S. of Live Mint.

“Developers are dealing with a combination of high debt and project delays on account of prolonged approvals. Most developers have come to terms with the fact that this debt needs to be paid, under pressure from banks,” said Anuj Nagpal, Co-Head, DTZ International Property Advisors.

He further added that “New norms for classification of restructured loans to real estate have led to demand for capital from NBFCs (non-banking financial companies), which is available at a steep price. The liquidity situation has improved globally, but very little is finding its way into real estate,” reports Live Mint.

Over the years, the property prices have touched sky; as a result, developers who expected recovery in home sales and potential home buyers desired for price correction are both proved as vain hopes.  However, affordable property segment observed an average price rise of 10 percent compared to last year and properties under luxury-super luxury segment saw a rise of 12 percent, according to Cushman & Wakefield India’s report.

When it comes to increase in property prices under affordable category, cities like Chennai, Delhi-NCR and Mumbai have witnessed the rise of 16 percent, 15 percent and 14 percent, respectively. In the luxury property segment, NCR and Pune have witnessed the highest average growth at 22 percent and 20 percent. Bangalore has observed a moderate average growth of around 12 percent and metros like Kolkata and Hyderabad saw an increase of 2-3 percent, last year.

Anuj Puri, chairman and Country Head, Jones Lang La Salle India stated that this year, property prices may come down in large township projects that are located in far-flung suburbs. “I do not expect a large-scale, national or even city-wise correction (in prices). But developers have already started launching new projects at lower rates,” added Puri, reports Live Mint.

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