The prominent changes noticed post-recession include reduction in property sizes, shift in buyer sentiments and developers focusing towards safer and realistic growth plans
Phases of a real estate cycle are seldom consistent, making it difficult to predict the beginning of a new phase. A housing bubble is characterised by drastic rise in valuations. Real estate bubble generally occurs when rise in property prices fail to keep pace with inflation rate or rise in median income. Undoubtedly, the recession has brought about significant changes in the realty sector. Although the property market is witnessing a recovery at present, it is not touted to be the same for a while. Affordable housing: The new mantra With the threshold being lowered and banks offering attractive interest rates on home loans in the sub-20 lakh category, the real estate industry witnessed a shift in focus among builders in 2009. Several developers announced their entry into the low-cost housing segment. Competitive pricing Significant price correction in the housing sector at the beginning of 2009 proved to be a boon for interested home buyers in terms of best pricing and extensive range of choices available. For instance, most of the prominent cities in Integrated townships: The current buzzword Integrated townships, the current buzzword, are drawing massive investments from leading players in the construction industry. Besides, spiraling property prices and increasing interest rates on home loans are prompting buyers to own a property in an integrated township that are mostly coming up in the city outskirts. Today, lifestyle, convenience and affordability are the three major aspects that define customer priorities. Integrated townships have turned out to be lucrative business proposition. Demand for such projects is expected to grow as they bring together all the elements — ‘walk to work’ lifestyle, shopping centres, recreation facilities — tailored to suit every budget. Furthermore, integrated townships help to decongest a city and promise a congestion-free living environment to its residents, thereby evolving the standards of ambience and lifestyle. Change for the good, here to stay The transition in the Indian realty sector will eventually result in some fundamental differences this time. The prominent changes noticed post-recession include reduction in property sizes and shift in buyer sentiments. Today, customers have become more circumspect and their purchase decisions are driven by need rather than by euphoria or hype witnessed during the housing boom period. At the developer’s end, the recent trend is to emphasise on safe and realistic growth plans, especially based on the fundamentals of brick and mortar. Projecting current trends indefinitely into the future is therefore risky. Developers should therefore replace ‘excess’ optimism with ‘cautious’ optimism, search for golden opportunities in downturns and lay more emphasis on understanding the factors driving the changes in the realty market. According to me, increasing number of low-cost apartments and tremendous housing deficit will encourage customers who deferred their home purchases during recession to buy properties in 2010. Moreover, there will be an increasing demand for better projects by leading developers due to the reduced number of projects launched over the past 1 year. Sushil Mantri, founder and CMD of Mantri Developers Pvt. Ltd, a leading realty firm headquartered in Bengaluru |
