Many people including my friends and associates called me and asked me how realty sector will do in 2012. The year 2011 was very challenging for property sector due to various reasons. Increase in land rate, materials and labour cost.. Slow approvals and permissions… Increase in home loans interest rates.. Inadequate finance available for this sector… and lastly slow demand across all segments..With my limited exposure and experience in this sector I am trying to put my thoughts for 2012.
The real estate sector is essentially divided into three segments. Land, residential properties and commercial properties. It has been proved over a period of time that land is the best asset class for investments. And it gives you multiple returns on your investments. Not only are the institutions and big investors buying big land parcels but the retail investors too have started investing in small parcels of land. I see this trend to continue in 2012 and large number of small investors will invest in land thanks to falling stock markets, low entry level in land investments and various options available across the country. I also see the large land transactions happening for townships as well as for organic farming. The land prices will increase between 20 to 50 % in 2012 depending on the location.
The commercial segment include office spaces, IT parks, retails, health care, hospitality, industries and SEZ. There will be moderate and steady demand for office spaces. The IT market will be very slow. I was expecting good demand in retail space with FDI policy, but with this taking backseat I see slow growth in retail also. The healthcare and hospitality sector will grow at healthy rate due to many Indian and foreign companies looking for big expansion plans in these segments. The industrial demand will be good but future of SEZs looks bleak due to uncertain and unclear policies and lack of interest from all stakeholders including government, corporate and developers. There will be a good growth in tier 2 and tier 3 cities for commercial segment.
The real excitement is going to be in residential sector. There is a demand of 30 million homes in India as on date and this figure is increasing every year. Every Indian irrespective of his social and economic status would like to buy and own a house because this gives him tremendous sense of security as well as satisfaction. Looking at this demand the big corporates like Tata, Godrej, Mahindra and others have entered in this sector. And due to this the product quality will improve substantially and customers will get better product in terms of master planning, layouts and space planning, amenities and technology. Big and self sustainable townships will be developed across India where the work place will be close to your home. The demand for luxury segment (2 crore and above) will be slow and mid segment (60 lacs to 1 crore) will be moderate in 2012. The prices will be steady in these segments and I don’t see any substantial increase in prices. In fact in some locations I foresee correction where the supply exceeds demand. I also see the big trend of 1 BHK homes coming back in most of the metros where the prices are beyond reach of common man. The home loans interest rates will also reduce by minimum 1 %.
2012 will be the year for affordable and low cost housing. Out of 30 million units, 85 % demand is in sub 15 lacs price segment and there is a huge opportunity for developers in this area. I see lot of activities happening in this in terms of FDI, new low cost construction technologies, entry of few big players. Tata’s have already entered in this segment and Mahindra’s have big plans for this. 2012 will be the year where customers will get good quality low cost housing and not some substandard product.
As far as second home market is concerned I see a growth of 60 to 70 % in 2012 due to strong growth in Indian economy and options available in terms of locations and prices starting from as low as 5 lacs. Second Home sector is emerging as preferred sector for investments because some of these destinations like Karjat, Alibaug, Shahapur, Murbad, Roha will soon become first home destinations. Talegaon near Pune is a classic example of this which we at Disha Direct promoted as 2nd home destination between 2005 and 2009. And today it is a first home destination and prices have increased more than 500 % over last 5 years.
In 2012, we will be launching some interesting and innovative projects in second home as well as affordable housing segment. We will also be launching our first senior citizen living project at Kamshet as we see this as future growth segment in Real estate sector in India.
Realty sector has a great potential in India and I see lot of innovations happening in 2012. Innovations which will change the future of this sector.
Article Source:- http://in.iproperty.com/realestate/blog/reality-for-realty-sector-in-2012
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