Residential Real Estate Sector Witnessing Some Revival: Affordable Housing

The government is expected to fund 15 to 20 per cent or roughly Rs 1.2 lakh crore over the next 3-4 years in affordable housing. The remaining is expected to come from private investments and PPP projects.

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Residential Real Estate Sector Witnessing Some Revival: Affordable Housing

Despite the real estate sector experiencing a prolonged period of muted growth, a slew of policy initiatives by the government, especially the push for affordable housing, offers a 6 to 8 billion sq ft development opportunity over the next three to four years, a report by CARE Ratings says. The residential real estate sector witnessing some revival as more of affordable housing inventory has started hitting the market during the second half of the financial year 2018.

The report added that the majority of the 6-8 billion square feet potential demand remains unmet. As per government estimates, over 40 million urban homes need to be constructed by 2022 in order to achieve its housing for all targets.

During the last 24 months, the government introduced schemes for affordable housing like interest subsidy for low and economically weaker sections, affordable housing being conferred infrastructure status to ease fund availability for these projects and additional tax-benefit for both developers and homebuyers.

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The government is expected to fund 15 to 20 per cent or roughly Rs 1.2 lakh crore over the next 3-4 years in affordable housing. The remaining is expected to come from private investments and PPP projects.

During the financial year 2018, the real estate sector experienced disruption due to the introduction of RERA in May 2017. Developers across the country chose to put on hold new project launches in order to gauge the impact of RERA on their ongoing and tentative projects and the regulatory and compliance measures needed to be taken in order to be compliant.

Thus, the first half of the financial year 2018 remained tepid for the real estate industry. The second half witnessed large organised developers launching projects in affordable housing segment which catered to the high-demand affordable homebuyers, thereby pushing up their sales during the period, the report said.

Read Also: Maharashtra: Just 13% Houses Built Or Under Construction Under PMAY

The Reserve Bank of India in its monetary policy meeting this month increased housing loan limits for priority sector lending (PSL) eligibility from existing Rs 28 lakh to Rs 35 lakh in metropolitan centres (with population of ten lakh and above), and from existing Rs 20 lakh to Rs 25 lakh in other centres, provided the overall cost of the dwelling unit in the metropolitan centre and at other centres does not exceed Rs 45 lakh and Rs 30 lakh, respectively.

This move is expected to bring more residential units situated in peripheral areas of metropolitan regions to be re-categorized as affordable housing units, according to CARE.

In among the largest deals during the year, a developer in North-India sold the one-third stake in its commercial real estate rental arm for Rs 8,900 crore to a Singapore based sovereign wealth fund. Investments in the residential segment have been mostly in the form of foreign funds investing into housing finance companies.

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The overall price of the residential real estate sector is expected to remain steady. Peripheral markets in larger metropolitan regions will experience a correction. The prices are unlikely to witness any major uptick over the next 12 months, especially in Mumbai, Bengaluru and Delhi-NCR regions.

Limited inventory addition in retail property segment and the significant number of single brands retailers entering India offers some opportunity for the segment with demand expected to pick up in untapped tier-2 and tier 3 cities, the report said.

Source Link- https://www.moneycontrol.com/

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