The way forward for real estate in 2019

Historically real estate prices have traditionally remained soft ahead of the elections, but have regained momentum afterwards. While the polls might not substantially impact property prices, they could slow down policy clearances and infrastructure projects critical to real estate. A stable government at the centre in 2019 will further boost the growth in the sector.

The lack of credit off take compounded by the current NBFC crisis has been a cause of worry for stakeholders in the sector. Despite the concerns, the economic indicators have remained positive with India’s GDP growth rate pegged at 7.3% and inflation been reined in at 4.8% in 2018. However, more efforts will have to be put in 2019 to maintain the existing momentum.

In 2018, developers largely focused on clearing existing inventory and adjusting to the new policy requirements. The increased transparency and accountability has created a more efficient environment which has found favour with both domestic and institutional investors. The stringent measures enforced by RERA has erased out unorganised players and only credible developers with proven track record are driving the market, both organically and via consolidation. This is expected to continue in 2019 and we will see established names further capitalize on their brand to strike joint development deals with smaller players.

Affordable housing will continue to drive residential housing both in metro and Tier 2 cities with preference for ready to move in units. The massive push for improvement in infrastructure, including significant capital expenditure for roads, railways and development of smaller airports will benefit this segment. This will provide better connectivity and have a multiplier effect thereby allowing developers to explore new projects in the peripheral areas of the cities. The Logistics sector is showing a massive growth, thanks to the implementation of GST. Hence, the current scenario offers excellent investment opportunities in residential real estate which are bound to yield positive returns in the long run.

REIT’s listings in 2019 will infuse liquidity in commercial real estate. It will fuel demand for office space from major sectors like logistics, manufacturing and consumer goods, besides IT and ITeS and the banking and financial services sectors. Rentals in metros and Tier-1 and Tier-II cities will continue to remain in demand. To sum it up, 2019 will start on a cautious note due to the upcoming elections, but will pick up significant momentum thereafter, in all real estate segments.