2019 has been no less than a rollercoaster ride for Indian real estate sector with a mix of some good things as well as some bad developments plaguing the sector throughout the year. As we step into 2020, lets pause and take a look back at what happened in Indian real estate in 2019:
The successful launch of India’s first Real Estate Investment Trust (REIT), Embassy REIT, in March this year opened new avenues for investments. The price of a single REIT unit touched high of Rs 462 as against the launch price of Rs 300, registering a growth of over 50 percent.
The portfolio comprises seven best-in-class office parks and four prime city-center office buildings totaling 32.7 million square feet (msf) spread across Mumbai, Bengaluru, Pune and Noida as of December 31, 2018. REIT was met with good response from the investors and this will pave the way for similar sales by real estate companies that have substantial portfolios of rent-yielding assets.
Subvention scheme ban:
In July, National Housing Bank’s directed home finance companies (HFCs) of “desisting” from offering loan products involving subvention schemes. The direction came as a result of a slew of complaints of frauds allegedly committed by certain builders under the name of subvention scheme.
The real estate segment took the ban not very well as subvention scheme was one of the most important schemes used by developers to induce purchase by homebuyers for under construction properties.
Amidst liquidity crisis and overall slowdown, the government announced a much-needed last-mile funding for stalled real estate or housing projects across the country on Nov. 7. The total fund size is estimated over Rs. 25, 000 crore with Central Government providing Rs. 10, 000 crore while the rest Rs. 15, 000 crore will be pumped by SBI and LIC in the due course of time.
As per the announcement, the Alternative Investment Fund (AIF) can be utilized even by the projects which have been declared non-performing assets or are facing insolvency proceedings. SBI Cap will manage the real estate AIF initially through an escrow account. It will prioritize the projects as per viability and the funds for any project will be deposited into the escrow of that particular project in a phased manner depending on the rate of completion of construction.
4. UP RERA Conclave:
India’s 1st National RERA Conclave happened on Nov. 4 in Lucknow which was was attended by some 1500 attendees including UP Chief Minister Yogi Adityanath, Minister of Housing and Urban Affairs Mr. Hardeep Singh Puri, chiefs of RERA bodies of 17 states along with 50 topnotch financial and banking experts, developers, promoters, and several home buyers’ groups.
The first-of-its-kind conclave was organized by UP RERA and was sponsored by Government of Uttar Pradesh and Government of India along with the partnership of NAREDCO, CREDAI and National Home Buyers Association. It was announced in the conclave that annual conclaves will be conducted on a yearly basis wherein the RERA officials and other real estate stakeholders can share and discuss the segment’s issues.
Announcement Of Real Estate E-Commerce Site:
During India’s 1st National RERA Conclave, Minister of Housing and Urban Affairs Mr. Hardeep Singh Puri made an announcement of real estate e-commerce portal. He declared that all information pertaining to the project that have been completed, projects that have received occupancy certificates, information regarding size of the house, price of the house and the location will be available on the portal so that “buying property at the portal will as easy as buying something on Amazon or Flipkart.”
An important announcement at 1st National #RERA Conclave by @CREDAINational, @NaredcoNational, @UPRERAofficial. @MoHUA_India @HardeepSPuri announces the lauch of #realestate e-commerce portal. pic.twitter.com/7rQABaM7mR
— RealtyBuzz.IN (@buzz_realty) November 4, 2019
Rise of Logistics & Warehousing:
Amidst slow moving real estate sector, logistics and warehousing saw some major leaps in 2019. This segment has seen leasing activity rise by almost 31 percent compared to H1CY2018, crossing 13 million sq. ft. in H1CY2019. The demand for industrial warehousing, in particular, has been driven by large scale expansion of warehousing and logistics facilities for e-commerce market places and third-party logistics service providers.
Post the global WeWork debacle, India’s co-working boom came under closer scrutiny as well after which some pertinent questions were raised about this ‘poster-boy’ of Indian commercial space. However, the demand for co-working space has been strong owing to its popularity among entrepreneurs, tech start-ups and even big multi-nationals though increasing market skepticism about the valuations in the segment may result in some moderation in growth plans for a large number of the co-working companies.