‘Affordable Housing’ a Pillar of Residential Realty Market

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Affordable housing is an unquestionable concept. The buyers and their service providers learnt a lot from the sudden growth of Indian economy and the recession which followed it.

It was a miserable condition for buyers when the annual GDP growth rate hit double digits. Be it be a vehicle or a house, an essential or a non essential product, everything was quoted at a big price. But, thanks to the banks which offered every kind of loans to the investors and brought them out of their miseries. However, the recession is over now.

After this recession, the affordable housing emerged as a new as well as interesting concept which became the ray of hope for all. Due to these affordable houses only, the realty market could recover so early. Thus, it would be nowhere wrong to call ‘Affordable Housing’ a pillar of residential realty market in this scenario.

Pre-Slowdown Observed in Realty Prices

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HDFC, one of the leading home-loans lenders has observed that the prices of residential realty which were hitting the peak levels are now undergoing pre-slowdown.

Deepak Parekh, the Chairman of HDFC said that there is an improvement in the economic condition and therefore, developers have started charging premiums. Due to the land prices touching sky, the realty prices also shot up.

As per the report, there was a downfall of 25% in residential real estate prices in October 2009, but now it’s steeping upwards again.

Parekh observe this change in the most active markets of India, for instance, suburbs of Mumbai, NOIDA in the NCR, a Bangalore suburb etc which all are experiencing price hike.

Also, he plans for having a real estate regulator in place.

June quarter not good for Realty Firms

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Since the sales of residential realty are diminishing gradually these days, it is expected that the real estate companies will experience decline in the first quarter of financial year 2010-11. However, it cannot be ignored that the office market is picking up with the economy.

As per the data collected by leading stock brokerages show, it is expected that in the June quarter, the realty companies will undergo around a 20% growth in the net profit and a growth of 38-40% in net sales. As per the data of last year, there had been a net profit of over 80% which certainly brings the conclusion that market has experienced a decline in sales and profit.

A stock analyst with a Mumbai-based brokerage said that as compared to the June quarter of financial year 2010, the numbers look somewhat flat in this financial year.

For instance, the gross margins of DLF were 49% and had a growth of only 4%. Similarly, Unitech’s net profits had a growth of just 1%.

Hike in Mumbai Property Prices is expected

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April 20, 2010

A current report by JLLM, Jones Lang LaSalle Meghraj revealed the fact that since sales are increasing and investor sentiment s are being strengthen, residential housing prices in Mumbai are expected to move further upside.

According to the report, demand for commercial spaces is improving and this growth is likely to continue till the end of 2010. As far as leases and outright purchases are concerned, this will result into a large number of transactions.

The supply is coming in all segments of residential, from luxury to mass housing. For the next year, in order to keep the markets going, both retail and commercial segments are also yielding enough supply.

The report also said that since many developers are now going for public funding, a large number of activities on the residential property front, owing to the strong demand will take place.

Besides, in order to boost accessibility more locations within the city and reduce commuting time, infrastructure projects such as the monorail, metro, and flyovers are being put in place.

Swami said that considering the pace at which these measures are implemented, in the medium to long-term this is good news for the realty sector. He also added that residential realty is likely to continue its demand growth, and thus will be on the priority list of most builders.