Getting real with Real Estate in 2016
The real estate market is more affordable and buoyant now than it has been over the last few years, and factors on both the supply and demand side are coming together concurrently to everybody’s benefit.
If you’re a home buyer or newbie prospective investor in real estate, the real puzzling questions have always been ‘when to buy?’ & ‘what logic do these prices follow?’
There is logic – albeit a complex one made of many correlated components. The upshot of it is that, the Indian real estate market is slowly pulling up in 2016, from a lull that had been on for approximately the last 2 years. Though the prices we are faced with are here to stay. Overall builder costs haven’t come down – i.e. construction costs (steel, cement and labour) may have reduced some, but that’s been offset by increases in the statutory dues developers need to pay. So, where’s the optimism coming from?
On the supply side – i.e. among developers, private equity funds, banks and non-bank financial companies (NBFCs), there are increasingly visible improvements in investor and developer sentiments, buoyed by the 2016 Union Budget, which has offered immense benefits to boost the real estate sector. Additionally, progressively reducing interest rates and an improving funding scenario with the imminent entry of Real Estate Investment Trusts (REITs) in the market also provide significant tailwinds to a hitherto sluggish real estate sector.
On the buyer side, even though the provisions will take time to translate to on-ground realities, the recently enacted Real Estate (Regulation & Development) Bill, 2016 sets a firm foothold in the sector, and would be a foundation for improvements and better transparency this sector for many years to come. It takes within its ambit many factors, including development as well as redevelopment and therefore, paves the way for smooth progress at two levels—first at the micro level, of homebuyers, and second at a macro level of the entire real estate sector.
So all in all, the real estate market is more affordable and buoyant now than it has been over the last few years, and factors on both the supply and demand side are coming together concurrently to everybody’s benefit.
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