No respite from slowdown likely in 2018

The lingering impacts of note-ban and taxation and regulatory reforms, which have hit the realty market in 2017, will continue to persist this year also as the huge inventory pile-up and limited scope for distress sale leave little scope for a significant price hike, says a report. 

 The cascading effect of note-ban, implementation of RERA and GST had dampened investment in the real estate sector in 2017, and led to a 5-7 per cent decline in average prices and there is no likelihood of prices clawing back this year, warned an industry report by Anarock Property Consultants.

 “Although the tail-end of 2017 showed some signs of revival and there was an uptick in demand for ready-to-move-in properties, multitude of challenges in the form of lower prices and inventory pile-up will continue in 2018,” Anarock chairman Anuj Puri said. He further said the huge unsold inventory and the possibility of distress sale limit the possibilities of any significant price appreciation near-term.

 Sluggish demand along with bleak return on investment has impacted the realty space for the past two-three years, Puri said. In 2017, private equity investments into the residential properties fell 25 per cent over 2016. “Also, for the first time in the past three years, realty as a whole and residential segment in particular lost the No 1 position in attracting PE money. The steady fall in appreciation and persistent gloom in the residential market have forced PE players to shift their focus to other asset classes,” Puri added.

 On the contrary, commercial real estate, especially office space, led predominantly by IT/ITeS and retail spaces, and industrial properties in the logistics and warehousing space are now on the radar of PE players, he claimed. — PTI