Country's real estate sector has faced all sorts of difficulties in 2013. To name a few of them- economic uncertainties, high interest rates on homes loans, subdued commercial leasing, huge unsold housing stocks, buyers' protest against delays, limited launch of projects and debt-ridden developers clocking lower revenue-net profit numbers marked the year for real estate.
Residential launches dropped by about 12 per cent this year from 2012, according to a report released by property consultant Cushman and Wakefield in December. An estimated 172,500 apartment units were launched this year in eight major cities-Mumbai, the national capital region (or NCR, which includes Delhi), Bangalore, Chennai, Hyderabad, Kolkata, Ahmedabad and Pune-compared with about 196,846 units in 2012, according to the report.
"It was one of the worst years in the last two decades not only because of slowdown, but weakness of governance at all level from Central to State to corporation levels," said CREDAI, Chairman lalit Kumar Jain.
However, he said that market improved during December: "2014 would be year of revival. Revival has started; the visible change would be seen from second half.
Similarly, Kaushal Jain, MD, Arihant Group said "Home buyers have unanimously complained about the high price rates of residential property this year, which is why demand did not take off as expected. This in turn led to huge unsold inventory which developers had to sell it off by offering freebies during the festive season."
Demand was also hit as the Reserve Bank of India (RBI) earlier this year curtailed certain subvention schemes. Terming these as an additional risk to both banks and home loan borrowers, RBI restricted banks and housing finance companies from offering upfront disbursement of loans to developers and asked them to instead link it to the stages of completion of a project.
As homebuyers went on a wait-and-watch mode, residential developers banking on customer advances to begin work on new projects became squeezed for cash flows. Many developers slashed prices to boost sales.
Cash-strapped industry, however, cheered market regulator SEBI's draft guidelines to allow Real Estate Investment Trusts (REITs). As part of the reform process, Parliament gave its nod to the 'Right to Fair Compensation and Transparency in land Acquisition, Rehabilitation and Resettlement Bill, 2013', ensuring stricter norms for land acquisition and fair compensation to land owners. Special economic zone (SEZ) norms were relaxed and new fund-raising norms introduced for housing finance companies and builders through external commercial borrowings for low-cost housing. Also, the overseas borrowing norms for infrastructure finance companies were also eased.
The year also saw some some big-ticket deals. Mumbai- based lodha Developers acquired iconic Macdonald House in central london for over 300 million pounds (over Rs3,000 crore).
The year 2013 also saw the concept of branded homes catching up. Supertech tied up with Italian fashion brand Armani group for interior designing of 100 super luxury residences in one of its project at Noida. lodha partnered US-based Trump Organisation to develop Trump Tower in Mumbai.
The year also saw some fund raising activities. DlF mopped up Rs1,863 crore through issue of over 8.1 crore fresh shares to institutional investors, enabling the company to dilute promoters stake to 75 per cent in line with SEBI's minimum public shareholding norms.
Godrej Properties, realty firm of Godrej Group, raised Rs 700 crore through rights issue.
Despite some of these actions, property market largely remained dull throughout the year and now the developers and property consultants hope hinge on the next Government.
"Consumer confidence will remain subdued during the first two quarters of 2014 owing to uncertainties surrounding the general elections and macroeconomic condition (both global and domestic). However, post the election, fence-sitting investors are likely to become active," Jones lang laSalle (Jll) India Chairman and Country Head Anuj Puri said.
On FDI, Puri of Jll said: "... 2014 may not be significant in terms of FDI inflows because, while it is mandatory for international retailers to be in joint venture with domestic retailers, finding a suitable partner is difficult.
"Most domestic retailers, including the big ones, have witnessed falling profits and rising debts. They are largely in consolidation rather than expansion mode," Puri added.
Giving outlook for 2014 Anupam Saha, Co- founder and Business Head RealtoExpress "India's real estate market is not expected to undergo any movement for the initial half of 2014.Though the general elections due in the month of May might turn out to bring some escalation in the status of Real Estate sector. "