Real Estate Recovery Still a Distant Dream
The Indian real estate market is still reeling from the effects of demonetization, GST, and new regulations, with new project launches at a 13-year low.
Real EstateReraGstDemonetizationIndian EconomyReal Estate NewsJul 15, 2024
The value of new projects launched in financial year 2017-18 was 23% lower than that of 2016-17 and 5% below 2015-16. The largest project launched in the June quarter was the Farrukhnagar Industrial Park Project, worth ₹600 crore. However, the stalling rate in real estate projects remains high, with an all-time high of 13% in the first half of 2018, resulting in over ₹2.5 trillion stuck in stalled projects.
The stalling rate in commercial real estate projects is particularly high, at 20%, while housing projects have a stalling rate of 11%. The sluggishness in the sector can be attributed to RERA, which has led developers to put new project launches on hold while they gauge the impact of the regulations on their ongoing and tentative projects.
Furthermore, bank lending data shows that there has been very little pick-up in borrowing for real estate, with credit growth to commercial real estate consistently falling since 2014 and remaining at subdued levels. Consequently, property prices have stagnated or fallen in many cities, especially where investment demand was a big driver of the real estate market. Suburban markets in Delhi-NCR and Mumbai have been hit the hardest.
Given the increasing likelihood of policy rate hikes in the coming months, interest rates are likely to harden, which will raise borrowing costs and likely dampen real estate investments. All these factors indicate that the Indian real estate market is still far from recovering from its current slowdown.
Information
The Centre for Monitoring Indian Economy (CMIE) is an independent economic research organization that provides data and insights on the Indian economy. CARE Ratings is a leading credit rating agency in India.
The Real Estate (Regulation and Development) Act (RERA) is a landmark legislation that aims to regulate and promote the real estate sector in India. It was introduced in 2016 and has been implemented across the country since 2017.
Frequently Asked Questions
What is the current state of the Indian real estate market?
The Indian real estate market is still reeling from the effects of demonetization, GST, and new regulations, with new project launches at a 13-year low.
What is the stalling rate in real estate projects?
The stalling rate in real estate projects is currently at an all-time high of 13%, with over ₹2.5 trillion stuck in stalled projects.
Which segments of the real estate market are most affected?
Commercial real estate projects have a stalling rate of 20%, while housing projects have a stalling rate of 11%. Suburban markets in Delhi-NCR and Mumbai have been hit the hardest.
What is the impact of RERA on the real estate market?
RERA has led developers to put new project launches on hold while they gauge the impact of the regulations on their ongoing and tentative projects, contributing to the sluggishness in the sector.
What is the outlook for the real estate sector?
The outlook for the sector does not appear very bright, with interest rates likely to harden, raising borrowing costs and likely dampening real estate investments.
Related News Articles
Bengaluru's Real Estate Market Struggles with IT Layoffs and AI Surge
The real estate market in Bengaluru, heavily reliant on the IT sector, is facing significant challenges due to recent layoffs and the growing influence of artificial intelligence. This article explores the impact of these changes on the city's property va
Dharavi Redevelopment Survey Enters Final Stage: 63,000 Tenements Assessed
The Dharavi redevelopment project is making significant progress, with over 63,000 tenements assessed in the final leg of the survey. This ambitious project aims to transform one of the world's largest slums into a modern, sustainable community.
Meet Mavjibhai Patel, the Indian Billionaire Who Bought a Rs 97 Crore Sea-Facing Mumbai Mansion
Get an inside look at Patel's new property and his impressive business empire, including his diamond manufacturing company, Kiran Gems.
Mumbai Property Market: 5% Increase in Registrations, Premium Housing Gains Traction
Mumbai's property market saw a 5% increase in registrations in November 2024, driven by a strong demand for premium housing and high-value properties priced above ₹2 crore.
Adani and Emaar in Talks for $1.4 Billion India Real Estate Deal
The Adani family's real estate unit is in advanced discussions with Emaar Properties to finalize a deal worth $1.4 billion for one of Emaar's Indian units. This move is expected to strengthen Adani's presence in the Indian real estate market.
MahaRERA Orders Tata Housing to Refund Buyer After Deducting 2% of Total Cost
The Maharashtra Real Estate Regulatory Authority (MahaRERA) has directed Tata Housing Development Company Ltd to refund the money paid by a homebuyer after deducting 2% of the total consideration. This decision comes after the builder failed to execute th