The real estate sector in India has little to cheer, even as some sectors of the economy show signs of modest growth after the slowdown induced by demonetisation.
A report launched by consultancy firm Knight Frank on Wednesday revealed something disappointing: residential projects launched during the first six months this year (H1) fell 41 percent when compared to the corresponding period last year.
In the process, they touched a seven-year low, indicating that weakness that set in with demonetisation last November persists even now. The strict provisions of the Real Estate Regulatory Authority (RERA) worsened matters for the multi-billion sector.
"Some of the most path-breaking reforms in independent India came to force in quick succession over a span of a few months. Described by many as the battery of reforms against the black economy in an unorganised sector, brave policy decisions such as demonetisation, the Real Estate (Regulations and Development) Act, 2016, the Benami Transactions (Prohibition) Amendment Act, 2016 and the recently rolled out Goods and Services Tax Act (GST) have time and again pushed the already sluggish residential market to the brink," Shishir Baijal, CMD, Knight Frank India, said.
Launches during H1 stood at 62,738, down from 1,07,120 in the year-ago period while sales plunged to 1,20,755 from 1,35,016 from January-June 2016.
From a volume sales viewpoint, the drop in H1 touched a five-year low, the firm said in its report titled India Real Estate.
"The residential market had barely come out of the demonetisation shock when the need for RERA compliance put breaks on a large section of new projects. NCR and Ahmedabad were worst hit with launches plummeting by 73 percent and 79 percent, respectively. Chennai was the only market to record a marginal 4 percent YOY rise in launches," the report said.
The six-month period saw launches picking up significantly in the affordable housing segment. "H1 2017 witnesses the resurrection of affordable housing across India with 71 percent of the launches under the Rs 50 lakh price segment up from 52 percent during the same period," the report said.
Hopes now rest on the positive fallout of the legislations, albeit in the long-run. "The short-term hiccups grappling the sector would eventually fade away and bear rich dividends in the future," Baijal said.
