Offices, affordable housing keep realty afloat
India's property industry continued its choppy ride through 2019 with commercial assets finding more takers even as affordable homes, underpinned by federal sops and lower interest rates, bucked the tepid demand trend in the residential real-estate market. Liquidity pressure on builders on the ba
Published -
Jan 2, 2020 5:05 AM
India's property industry continued its choppy ride through 2019 with commercial assets finding more takers even as affordable homes, underpinned by federal sops and lower interest rates, bucked the tepid demand trend in the residential real-estate market. Liquidity pressure on builders on the back of the NBFC crisis led to a significant rise in consolidation across geographies, paving the way for joint ventures, development agreements and even outright sale of projects. The government’s announcement of a Rs 25,000-crore last-mile financing support for stuck projects has rekindled hopes among homebuyers who are yet to get delivery of the homes they paid for. “The housing market has managed to show some growth this year and this could have been a recovery year had it not been for the slowdown in credit and liquidity,” said Pankaj Kapoor, MD, Liases Foras, Liases Foras Real Estate Ratings & Research. Kapoor said housing demand growth should pick up in 2020 as builders are offering discounts, and time correction also would attract homebuyers. On Monday, State Bank of India (SBI) reduced its external benchmark rate by 25 basis points. The revised effective benchmark lending rate of 7.8% will come into effect from January 1, and new homebuyers will get loans starting 7.9%. Commercial real estate in key office markets has set a new benchmark in net absorption and completions. While 46.5 million sq ft offices were absorbed, nearly 52 million sq ft grade A offices were completed in the year, showed JLL India data. A significant growth was recorded in the second half, with net absorption increasing 63% to 24.7 million sq ft. The last such spike in net absorption was reported in 2011, when the market reported net absorption of 37 million sq ft. Demand growth in 2019 was driven by strong expansion of IT/ITeS, which accounted for 42% of total leasing, and co-working operators that formed 14% of overall leasing. In 2019, annual housing sales exceeded launches for the first time since 2016, indicating further stability in the residential market, JLL’s latest report showed.
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