Properties in Chennai

6 Things Real Estate Market Will Witness in 2019

Real Estate Trends In 2019
Written by Team Urban Tree

Real estate market is gradually moving towards a revival phase after experiencing a slowdown in 2017. Mega reforms like Real Estate (Regulation and Development) Act 2016 (RERA) and the Goods & Services Tax (GST) had resulted in uncertainties initially, which was one of the main reasons for sluggish growth in the real estate market last year. However, RERA and GST have now emerged as game changers and they are playing an important role in boosting growth in real estate market.

The economy is also picking up the pace, which is another good sign for the real estate industry. According to RBI survey of professional forecasters conducted in August 2018, GDP growth will be 7.4% in 2018-19. This is expected to improve by 20 basis points in 2019-20, powered by increased consumption and investment. CPI inflation is also expected to be in control at around 4.7%, which will increase savings and motivate people to invest in the real estate. To gain a better understanding of how realty will take shape in the future, let’s take a look at 6 things real estate market will witness in 2019.

#1. Affordable housing will be the primary growth driver

Government’s push for affordable housing is another key factor that will dictate realty trends in 2019. Under the Pradhan Mantri Awas Yojana (PMAY-Urban), “Housing for All” is to be achieved by 2022. It’s one of the most ambitious projects ever undertaken, wherein around 20 million homes are to be constructed. A number of key decisions have been taken that are driving growth in the affordable housing sector. Some of these include:

  • Infrastructure status to affordable housing
  • Giving 5 years for completing affordable housing projects instead of just 3 years
  • Using carpet area to define affordable housing units instead of saleable area
  • Refinancing facility for individual loans provided by National Housing Bank

Public Private Partnership (PPP) is another key initiative that is boosting growth in affordable housing. Under PPP policy, Rs 2.5 lakh central assistance is provided for every affordable house, even when it is built on private land. PPP model has also unlocked government land in urban areas, which can now be used for affordable housing. There is another form of PPP model, wherein Rs 2.5 lakh central assistance is provided in the form of interest subsidy on bank loan. This subsidy is transferred upfront to the beneficiary account under the Credit-Linked Subsidy Component of the PMAY-U.

Technology advancements are also being used extensively to boost affordable housing. This will help reduce the cost of construction and will make way for durable and environment friendly housing units. For example, many affordable housing projects are utilizing precast planks and joists to reduce cost. Wood is being replaced with reinforced concrete (RCC) door frames and window frames. In 2019 and beyond, the use of prefab technology and alternative products will continue to dominate the affordable housing segment.

#2. Sales will gain momentum

Residential housing sales have been rising in the recent past. During H1 2018, more than 64,000 units were sold. This is already more than half of the total sales (96,000) registered in 2017. A significant percentage of residential sales happen during the festive season, so a lot more sales can be expected in H2, 2018. Residential launches are also gaining momentum, with 40,000 units mark breached in Q2, 2018. The 40K mark has been achieved after a gap of nearly 8 quarters. Bengaluru and Mumbai have emerged as the top contributors to new launches in recent times. Residential launches and sales will continue to witness significant growth in 2019.

#3. Improved transparency

With RERA in place, homebuyers can expect increased transparency in the transactions and operations of builders. Earlier, there was a tendency to divert funds to other projects, which led to project delays and other complications. Since accountability was not fixed, homebuyers had to endure many hardships. There are many ongoing court cases where thousands of homebuyers have been cheated of their hard-earned money. With RERA, builders are now required to disclose all details of the project to get it registered with the respective RERA organization in the state. They are also bound to complete the project in time and comply with other rules and regulations described under RERA. Improved transparency allows people to buy with confidence and this trend will continue in 2019.

#4. Market revamp

Sweeping changes like RERA will ensure that only the good ones are able to continue their real estate business. Unscrupulous operators will either have to comply with new norms or shut down their business. As more and more home buyers become aware of RERA and its benefits, the demand for unregistered residential projects will continue to wane. RERA registered projects will gain momentum, which will automatically weed out dubious and fly-by-night operators. The Benami Transactions (Prohibition) Amendment Act 2016 will also have a major impact on how builders conduct their operations. It will help curb the use of black money in real estate transactions and promote the use of proper banking channels.

#5. Private equity investment

With residential real estate emerging as a stable investment option, private equity investors will be willing to invest in this market segment. Earlier, residential markets were driven by debt structures and there was no surety about returns on investment (ROI). However, with increased transparency brought about by RERA and other policies, private equity investors would be looking to invest their money in the residential real estate market. Such investments can come in the form of partnerships and joint ventures.

#6. Housing for students and senior citizens

There’s been a new trend wherein housing units are being specially developed to cater to the needs of students and senior citizens. This trend will gain momentum in 2019, as there’s a huge unmet demand for housing for students and senior citizens. Demand for student housing will be consistent in the future and it will increase in the case of housing for senior citizens. Senior citizens are estimated to be around 98 million, which will increase to 240 million by 2050.

2019 appears to be a promising year for real estate market. However, there can be challenges, as general elections are scheduled in 2019. If political uncertainties emerge, it can affect the economy and subsequently the realty sector. Slow and/or diluted implementation of RERA by some states is also a cause for concern. If positive developments take place in 2019, things will turn out good for real estate market, benefiting all stakeholders including home buyers, builders and investors.

 

About the author

Team Urban Tree

Urban Tree are the creators of magnificent homes in Chennai. Urban Tree is committed to creating world-class homes featuring innovative new styles that are meticulously integrated into every aspect of modern day living.

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