For India’s real estate sector, year 2015 presented a mixed bag of positive and painful pointers, said S K Sayal, Managing Director & CEO of Bharti Land Ltd.
He said the Modi government’s focus on infrastructure development; affordable housing for all and the 100 Smart Cities’ mission are positives that will address infrastructure and housing shortfalls.
On the policy front, passage of the Real Estate Regulation Bill, single window clearance mechanisms and relaxation in FDI norms will boost transparency and foreign inflows.
On the flip side the inventory levels are high as sales continued to stagnate in the first three quarters. Despite some pain points, inflation is under control and the realty scenario is slowly turning around.
The presence of some green shoots spells good news. One surprising report was that investments of almost $8 billion have entered the sector, touching a seven-year high. The inflows came largely via private equity (PE) investments and non-convertible debenture borrowings.
These indicate PE and other long-term investors are willing to wager on Indian realty, confident the sector will bounce back soon, Sayal said.
He said the role of banks in lowering interest rates will be crucial. RBI Governor Raghuram Rajan cut interest rates more than once, for a total drop of 1.25% during 2015. Unfortunately, banks did not proportionately pass on the benefits to customers.
In the interim, the market will continue its incremental recovery, although quality projects would attract strong customer demand.