Who Reaped The Highest Benefits From India's Real Estate In 2016?

The way things were shaping during the year 2016, nobody thought India's real estate sector was going to remain the same anymore. Even if home sales numbers were not very impressive – according to PropTiger DataLabs figures home sales across nine major cities of the country saw either no growth over the previous year or witnessed only a marginal uptick — sector stakeholders knew things were going to be better in the long run. Behind galloping every bitter lied the hope of things getting better soon.

The teething problems that everyone might have to face as the government puts into effect the various provisions of the Real Estate (Regulation & Development) Act, 2016, will only be too little a sacrifice to revive and rebrand a sector that seems to be losing its mojo in the recent times. Expensive property is keeping prospective homebuyers of major cities away from the market; words such as project delays and default define the news pertaining to the sector.

When Prime Minister Narendra Modi announced his government's demonetisation move, many considered a death blow for a sector where use of unaccounted money (popularly known as black money) is rampant. But those who knew better told you there were no shortcuts to achieving long-term success, and that the move will only help the sector regain its lost glory. Use of land to gain undue advantages would be in the end bad for the overall health of the sector as is evident from the current state of affairs.   

However, someone took the hit for all this. The year 2016 is a period that would perpetually stay in the memories of Indian real estate developers. Amid the changing winds, sales figures went down, hitting their profit margins while they struggled to meet deadlines. While understanding and preparing themselves for the regulatory changes was hard enough, developers were also seen losing their sleep over their swelling inventory stocks in mega cities. From the profit-making point of view, it was not a good year for real estate developers. The same is true of real estate investors, too. Those who had invested in Indian property expecting windfall were inconsolable to see that property prices across cities remain stagnant. It was also hard to find takes; no amount of cajoling would bring buyers back to the market.

In a scenario like this, who gained from the sector in 2016 while an upheaval was on? The answer would be home buyers. In the middle of all the changes that the sector underwent during 2016, one thing become clearer that the oft-repeated “consumer is the kind” dictum will hold true always. For real estate sector, people from the lower-middle and middle-class form the largest part of its consumer base, and it is this segment which felt disconnected from the sector as property prices soared the past decade, making it unaffordable for them. There was no option but to stay inactive. The impact of this was for all to see. The passive behaviour of the humble consumers led to the second-biggest employing sector of the country witnessing a slowdown three years in a row.

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Authorities and developers made a hurry to make things better. In his Budget speech, Finance Minister Arun Jaitley announced doles especially for the middle-class. The Modi government also went on a frantic drive to push affordable housing. Passing of the real estate law, reduction in home loan interest rates, discount offers, changes in stamp duty charges or circle rates, nothing seemed to work on buyers that had decided to take a break from the sector. This further reiterated the fact that unless things turn fair again there is no returning of the might buyer to the market.

By staying put, home buyers have confirmed their victory over others, and have put to display the fact that their “humble” presence holds the key to making or breaking things.

Also read: Know 5 Policies Announced In 2016 That Shook Real Estate