- India is expected to witness a better GDP in the forthcoming months. While the RBI has retained its growth projection for 2017-18 at 6.5%, the International Monetary Fund and the World Bank have projected India’s growth to be higher than that, as calculated by the Advance Estimates. Both multilateral agencies have pegged the country’s growth at 6.7%. This bodes well for the country’s investment prospects.
- The real estate sector held significant expectations from the Union Budget 2018, hoping for alleviating measures post a testing period of reforms. However, the budget chose to primarily focus on strengthening agricultural and rural economy, while laying vast emphasis on rural housing. The PMAY scheme launched in 2015 aimed at developing 51 lakhs houses during 2017-18 as well as in 2018-19, implying the construction of more than one crore houses exclusively in rural areas. In urban areas assistance has been sanctioned to construct 37 lakh houses. This bodes well for the housing sector and the vision of ‘housing for all’ in the coming future.
- The budget also announced the establishment of a dedicated affordable housing fund under the National Housing Bank for priority sector lending. This will provide a further impetus to the development of housing in this segment.
- On the real estate investment front, with demand for capital high in 2017 as project cash flows continued to remain pertinent, 2018 is expected to eventually see long-term equity capital into residential projects without which it would be difficult for realty firms to sustain operations in the post-RERA regime.
- Demand for office space is likely to remain upbeat and maintain positivity in Bengaluru, Mumbai, Hyderabad and Chennai, despite the macroeconomic disruptions in the recent months. Strong growth in the economy and employment prospects would lead the office markets to thrive in the forthcoming period. Rentals are expected to increase in select micro-locations with dearth of ready-to-occupy space.
- On the residential front, new launches are expected to slightly improve in Bengaluru, Hyderabad and Chennai, as compared to the figure in Q4 2017. Clarity on recent policy reforms would lead to allaying buyer cautiousness and lend positivity to the market.
- Retail real estate, which had grown wary with the advent of e-commerce, is projected to observe a healthy momentum, as depicted by the return of investor interest. Increased focus on technology will lead to greater innovation in the retail sphere, influencing both retailers and customers alike.