Published & Updated as on - 2010-02-18

As the year 2010 begins, it is heartening to note that home buyers are taking the lead in reviving the realty market. Looking forward, it is almost certain that the residential sector will continue to play a major role in shaping future growth in the sector. For home buyers, this also means that developers are going out of their way to woo customers, with projects to suit different tastes and budgets.

Talking about the phenomenon, Kaustuv Roy, executive director, India, Cushman and Wakefield, the international property consultants says, “Post meltdown, the residential sector has been the fastest to recover with stabilization of prices being the major factor. The oversupply percentage was lower compared to other sectors, where estimates were much higher than the actual demand.”

Roy adds, “Since June this year demand-supply gap has been lowered in the residential sector with many projects launched. This is the most versatile sector with a faster turnaround time (within one - and- a-half to two years) unlike a commercial or a retail project. In a residential project, booking starts from the launch moment, unlike the other sectors, and that will drive the upward movement of the real estate sector.”

A similar note was struck by Anuj Puri, country head, Jones Lang LaSalle Meghraj. In a December 2009 report by Cityscape Intelligence, he says: “Although many large retailers are back in the market and pursuing growth cautiously, it is the residential sector which is undoubtedly the revival king, striking a high note over the last one and-a-half quarters, with pent-up demands bubbling over into hardcore sales and committed enquiries. The residential revival is by far most sustainable”.

The actual players in the market, the developers, also feel the same. Jayant Gehi, general manager, Mayfair Housing says, “I couldn’t agree more the residential sector will lead this has already started , as in the last six months major consumers came from this segment. Although recently we have seen signs of revival in the commercial and retail sector too, at the helm of it all, residential spaces would find the greatest number of buyers. India needs too many homes and there are too few at the moment. Supply would increase as the government and banks are taking interest in augmenting the sector.”

Manju Yagnik, vice-chairperson, Nahar Group, adds, “Banks are supporting residential projects with loans and tie ups. A great deal of activity is seen in the middle as well as the luxury segment. In fact the commercial projects are kept under lock and key as they were made for IT and foreign companies, which have put their plans to enter India on hold since recession. The oversupply in these spaces would take some time to absorb as opposed to the residential sector, which is in short-supply.”

Yagnik informs, “People who were waiting are returning to the market as they have seen enough ups and downs in the property market for the past seven years and are aware of the fact that the prices are steadily appreciating.

The NRIs too are showing interest in residential properties as they are feeling insecure after the several ups and downs in recent years. They are looking to buy homes to secure their place in their homeland.” Brotin Banerjee, CEO and MD, Tata Housing, says, “The Indian residential market has certainly been leading the way to recovery.

Transaction volumes have rebounded and pricing improved across the country. While the off-take has been modest in most cases, moves have been substantial in some geographies, especially in the affordable housing category.

Sustainable integrated township development offering a lifestyle and modern amenities has received tremendous response from the consumers.” Banerjee also believes that the next financial year would witness the residential property developers being agile, innovative and cost conscious. They would work harder to win consumers, change their products to suit various budgets and the brand would play a role in giving comfort and confidence to a jittery consumer market.

Kaustuv Roy feels that the affordable housing would drive the market. But in Mumbai and Delhi, there would be considerable demand from the premium segment as well. There will be demands across all sections as these cities offer employment from various sectors and most of them are showing signs of recovery.

However, in the Southern cities and Pune the dependence on IT sector is heavy. However, both Anuj Puri and Roy feel that the sector has to be sensitive to the price factor, which if escalated beyond affordability may see a setback.

Source:Economic Times 9/01/10