New house launches touch 5-year bottom

Girja Shankar Kaura

Tribune News Service

New Delhi, January 29

The real estate sector has decelerated in the last three years from 7.5 per cent in 2013-14 to 6.6 per cent in 2014-15 and further to 4.4 per cent in 2015-16.

The sector hit rock bottom, falling to a five-year low in 2017-18, and a change in market sentiment to attract more foreign direct investment (FDI) would be required for a revival of the beleaguered sector, the Economic Survey has pointed out. The share of real estate sector, which includes ownership of dwellings, accounted for 7.7 per cent in India’s overall GVA in 2015-16.

While residential real estate market saw sales of only 58,000 units in the first half of 2017, new home sales fell to a five-year low of about 1,01,850 units during this period.

The sales during the first half declined by over 38 per cent when compared with the same period a year earlier, while unit launches fell by over 56 per cent during the same period, the survey said. Residential launches across top 14 cities in India during H1 2017 fell to the lowest in past five years, the survey said. Though some recent reforms might have affected the residential market in the short term, these reforms helped in bringing down the unsold inventory levels from 8,88,373 units in April 2016 to about 8,07,903 units in October 2017.

Private equity investments in the real estate sector have increased from $0.9 billion in 2013 to over $5.9 billion in 2016, recording more than six-fold jump. The year 2017 is on its course to witness the highest annual investment in Indian realty in the past decade, with about $5 billion worth of funds already been invested between January and June 2017.

According to the survey, the strength of the Indian economy and favourable demographics, coupled with the introduction of several growth-oriented reforms, are aiding the real estate sector to attract higher investments.