homereal estate NewsSecond of fiscal bullish for real estate sector

Second of fiscal bullish for real estate sector

Second of fiscal bullish for real estate sector
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By Timsy Jaipuria  Oct 22, 2021 5:06:00 PM IST (Published)

According to experts, the upcoming two quarters look bullish for the real estate sector in India.

As the country looks at healthy vaccination numbers and the economy coming back to shape post the second wave, experts feel that the real estate sector is now at a rock bottom in terms of prices and soon with the festive season demand is likely to push up the prices by 1.3-1.4 times of the current levels.

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In a recent report, Motilal Oswal Financial Service said, "Prices have hit rock bottom and are beginning to recover in a select pockets/projects after remaining flat for the past 6-7 years. While developers will keep a close eye on how the inventory position pans out, the supply shortage will certainly cause prices to rise from that prevailing12-18 month back. Prices are expected to rise 1.3-1.4x from current levels over the next 4-5 years, or 4-5 percent on a CAGR basis."
Checking the pulse at the ground level, Vikas Wadhawan, group CFO, Housing.com, Makaan.com and Proptiger.com feels that this year's festive season could be a game-changer for the Indian realty sector. In the residential real estate space, the excitement around this festive season seems more intense this year.
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"According to Housing.com’s IRIS index for September 2021, the online property search volume has surpassed the historical peak of September 2020. The growth momentum of high-intent buyer activity has continued to stay above-100 mark sequentially since the last three months (July-September 2021), suggesting that the residential real estate sector has bounced back quicker post the second wave than the first," Wadhawan said.
Not just this, the upcoming two quarters too look bullish for the sector.
Sales numbers of players such as Oberoi Realty, Sobha and Macrotech Developers have shown a significant upswing in their September quarter financial results. Another additional factor is the historically low-interest rates on home loans and lucrative festive offers by developers, which is too pushing up the demand.
Mohit Goel, CEO, Omaxe Ltd, said, "Since a large chunk of tenants across India, reverse migrants, aspirational homebuyers, those desirous of moving into organised living spaces and the emergence of real estate as a safe investment along with the emotion of owning a home to ensure the protection of livelihood have been solidified with the pandemic. While this phenomenon is region agnostic, but it is more pronounced in state capitals and tier 2/3 cities. Factors like all-time low home loan interest rates, bottomed-out real estate prices, discounts and government incentives have given wings to homebuyers' to fulfil their dreams. This in turn has given a boost to the real estate sector not just in metros but state capitals and tier 2/3 cities. The positive market sentiments coupled with the festive season also bodes well for the sector."
"Unlike the previous years, this festive season is expected to see a paradigm shift in the psyche of the Indian buyer, who is more cautious, however, smarter than before and plans strategically before investing. Thus, the eyes are laid on the real estate sector, which has seen a significant increase in residential sales despite spiralling COVID-19 cases and is expecting a jump in sales in the festive season. However, in contrast to the previous years of impulse purchase, this year will be regulative to the pocket strings of the buyers. The trend and efforts by the developers along with the sudden pique in the interest of investors in real estate clearly indicate a positive outlook for the RE industry this festive season," added Karan Kumar, CMO, DLF Ltd.
Not just the residential, even commercial real estate space is picking up. "Post the second wave of COVID-19, there has been a spurt in fresh enquiries. We are hopeful of leasing the entire premises at Max House, Okhla, which is currently 18-20 percent leased, by the end of this calendar year. Our other project - Max Towers, Noida is already 90 percent+ leased out. While we leased more space in FY21 than in FY20, we believe FY22 is likely to be even better in comparison," said Rishi Raj, COO, Max Estates Ltd.
Raj further said, "There is an increasing trend of flight to quality, with top-notch companies upgrading to Grade A+ spaces, even while reducing the total office space requirement. Organisations are choosing well maintained contemporary office complexes that offer better employee well-being and the best of amenities. As a Grade A+ office space player that provides an unparalleled experience, we certainly stand to gain from the trend. Coupled with the 'return to office' trend at well-known IT/ITES companies is also expected to lead to higher leasing activities in the coming months."
Similarly, Harsh Trehan, CMD at Trehan Group, said, "All the factors are very conducive from the real estate perspective - lower interest rate, stable prices and adequate supply. Add to it, the pent up demand factor. As a result, we are witnessing an uptrend in the real estate market. Compared to the last couple of years, already there are much higher queries and sales are expected to be much higher this time around. Recently, we have sold around 70 units in a project in Bhiwadi and encouraged by the response from customers, we have launched 320 independent floors in Gurugram. The response so far has been phenomenal and we expect to book a bulk of our offerings by the end of the year."
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