With the economy showing signs of recovery in the first quarter of 2009, the real estate sector in India witnessed a significant rise in sales. The activities in the realty sector picked up following an increase in affordable housing, lower interest rates and improved bank credit for the home loan segment. Apart from this, reduction in the number of fence-sitters also contributed in a major way.
“After a challenging 2008, the realty sector in India is improving gradually with homes sales back on track in April-June 2009,” says Vishal Pande, Director of Amte Realtors, a mid-sized real estate company in Patna.
 In the first quarter (April-June) of 2009, sales of leading Indian realty developers more than trebled due to the above-mentioned incentives. The following figures testify to the fact:
First quarter sales: not a flash-in-a-pan
The current financial year has been successful in prompting major realty players in India to go aggressive with housing projects of around 60 million square feet, following market stability, renewed investor interest and encouraging responses from buyers.
In financial year 2009-10, Housing Development & Infrastructure Limited (HDIL) plans to develop realty projects of around 8 million square feet, DLF intends to line up around 15 million square feet of new launches and Unitech went a step further with 27 million square feet of housing projects.
Future prospects look bright
There are expectations that the current rise in the realty sales will continue to roll primarily because big developers have ventured aggressively into the affordable housing segment and Indian banks have increased their realty exposure.
Driven by the ongoing financial crisis, high interest rates and severe liquidity crunch, the realty players in India have shifted their focus to the affordable housing segment. This venture into the mid-income housing segment prompted them to lower prices by 20-30% as against the prevailing prices. The move proved beneficial for the developers and for the sector on a whole as their apartments sold quicker than expected, easing liquidity constraints as well as debt roll-overs. This brought them back on track and gave them the confidence to invest in the mid-income housing segment. In 2009-10, affordable housing accounts for around 90% of the total projects lined up by major Indian realty players.
To give the realty sector a boost, Indian banks are keen on increasing their monthly home loan disbursals. In 2009-10, the State Bank of India (SBI) has set a target of 30% growth in home loan disbursal, as against 21% in 2008-09. HDFC Bank witnessed a 22% rise in home loan disbursals in the first quarter of 2009-10.
“Initially, buyers were not willing to invest in new properties following market instability and higher interest rates. But with the market prices stabilising and interest rates coming down, the realty sector has begun to look up and this trend is expected to continue,” opines says Ankit Shah, Director of Vishnu Properties, a mid-sized real estate company in Ahmedabad.
The significant rise in real estate sales not only brought relief to almost all the realty developers in India but also gave them the confidence to venture into new projects, thereby escalating the realty business in India. Jeeta Bandopadhyay |
