There seems to be no respite in the offing for India’s real estate sector at least during the first half of the calendar year 2014, believe majority of players in the realty sector, highlighted the ASSOCHAM survey.
ASSOCHAM survey covered about 1,000 developers, real estate brokers and agents, property consultants and senior officials of various companies in the real estate domain during the course of past one month in 10 prominent cities of Ahmedabad, Bangalore, Bhopal, Chennai, Delhi, Hyderabad, Jaipur, Kolkata, Lucknow and Mumbai.
“The situation on real estate front is not likely to improve much owing to an uncertain political scenario at least during the first six months due to forthcoming general elections and poor investor, end-user confidence due to sluggish economic growth coupled with continued high property prices,” asserted about 60 per cent of respondents.
“The overall performance of India’s real estate sector in the year 2014 is likely to remain subdued as people refrain from buying property and developers continue to grapple with high debt, rising construction costs, unsold inventory even as property prices go through the roof thereby slowing the demand for real estate leading to an oversupply situation,” many of these said.
In its survey, ASSOCHAM representatives sought various suggestion from key players in the real estate sector for revival of the sector – need for a single window clearance system to clear all projects instead of seeking approvals of myriad regulators and authorities thereby saving both time and costs; need to evolve a rational structure vis-à-vis payment of stamp duties on sale and purchase of land and housing properties; revise the limit of interest deduction on housing loan of Rs 1.5 lakh introduced by Finance Act 2001 to Rs five lakh; allow more foreign direct investment (FDI) in real estate firms to strengthen the industry in townships, housing, built-up infrastructure and construction development projects to spur economic activity, create new employment opportunities and simultaneously add to available housing stock and built-up infrastructure.
On its part, ASSOCHAM has also given certain recommendations to the government to bring the realty sector back on growth trajectory which include – repeal highly restrictive and archaic laws of Rent Control Act and Urban Land Ceiling and Regulation Act; the government should act as a facilitator and not as a regulator for real estate projects more so where demand is more than supply; state governments should complete land records process and make them computerized; infrastructure including transportation, logistics, water, power, housing, healthcare, sanitation and others must be taken in tandem to spur real estate development; government should grant industry status to real estate sector to facilitate bank loan and long-term finance for real estate projects and real estate must be classified as infrastructure and priority lending sector should be made available to keep pace with demand-supply scenario.
Outstanding investments attracted by India’s real estate sector have plummeted from over Rs 15.39 lakh crore as of September 2012 to about Rs 14.51 lakh crore as of September 2013 thereby registering significant drop of about six per cent, apex industry body ASSOCHAM said today.
“The real estate sector suffered grave turbulence in 2013 due to plethora of reasons like rampant economic slowdown both globally and domestically, liquidity crunch, unstable currency, high input costs, labour shortage, high interest rates and growing inflation,” according to a comprehensive analysis titled ‘Real Estate Sector: Outlook for 2014’ conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
Interestingly, investments in real estate sector had increased marginally by about two per cent from about Rs 15.1 lakh crore as of September 2011 to Rs 15.3 lakh crore as of September 2012, highlighted the ASSOCHAM analysis.
About 68 per cent of the total investments in realty sector as of September 2013 were under implementation while about 69 per cent of real estate investments were under implementation in the previous year.
Maharashtra accounts for about 20 per cent share of these investments followed by Gujarat (13 per cent), Haryana (11.2 per cent), Karnataka (11.1 per cent), Uttar Pradesh (9.8 per cent) and Andhra Pradesh (9.6 per cent).
The states of Jharkhand, Haryana, Gujarat, Madhya Pradesh and Andhra Pradesh are top five states that have seen significant decline in investment inflows in realty sector during the year long period between September 2012 and September 2013. While Bihar, Jammu and Kashmir, Assam, Orissa and Uttar Pradesh have recorded a surge in investments attracted by realty sector.