The real estate market was a mixed bag in 2018. It witnessed a recovery of sorts with at least 30 per cent growth in home sales and unsold stock getting liquidated. However, the recovery was limited due to a liquidity crunch and slowdown in deal closures.

Going forward, affordable housing will continue to drive sales over other categories, especially with the added focus from the Centre. Property consultants have given out different numbers in terms of housing sales. According to JLL India, housing sales rose by 47 per cent, while Anarock claimed that there was a 16 per cent rise.

Developers and consultants expect sales to be “somewhat subdued” in the first half of 2019, mainly because of the upcoming elections and the liquidity crisis, which is expected to continue into the first half of 2019.

But government intervention – to ensure liquidity in the market – and a proposal to cut the GST rate on under-construction flats (from 12 per cent to 8 per cent) may spur sales in the second half.

“We expect an era of unceasing growth for Indian realty,” said Jaxay Shah, National President, CREDAI.

Price movement

According to sources, average property prices pan-India saw a 1-2 per cent rise (primarily across the seven major cities – Delhi-NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune and Kolkata).

The average price per square feet stood at around ₹5,550 in 2018 against ₹5,490/sqft in 2017. At city levels, average property prices remained more or less on par with 2017 levels. Consultants point out that quarter-on-quarter trends suggest housing prices will remain flat in 2019 despite new housing launches being ‘muted’.

Slowdown in closures

According to Niranjan Hiranandani, Founder-Chairman, Hiranandani Group and President, NAREDCO (National Real Estate Development Council), 2018 saw a definite improvement over the previous year in terms of sales.

“Please understand that demand has not subdued. Sales numbers have risen. But closures (bookings in under-construction projects) have slowed down,” he told BusinessLine .

Incidentally, homebuyers have held back on bookings in the case of under-construction properties because of GST. (There is no GST on projects that have a completion certificate.) This only accentuated the liquidity crunch, especially for smaller developers.

Affordable housing

Incidentally, affordable housing continues to be among the biggest sales driver. Backed by government sops in 2018, residential supply remained strong. In fact, this was the year when affordable housing drew developers’ interest.

“Over the next three years, at least, affordable housing will lead the race when compared to other categories. What this means is a new sector that was not there has now opened up,” said Hiranandani.

According to Anarock Property Consultants, new launches across the seven cities stood at 193,600 in 2018; and 41 per cent of these (around 79,400 units) were in the affordable housing segment.

Secondary sales market or units up for resale, is likely to get a boost, especially with ready-to-move-in projects that do not have a completion certificate attracting a 12 per cent GST. Developers are already struggling with huge unsold inventory and are leaving no stone unturned to boost sales and generate cash flows. The NBFC crisis jolted the sector and fund-raising became a major concern.

Despite this, developers are cashing in on the buyers’ preference for ready-to-move-in units since these are not liable for GST. However, “developers have no choice but absorb GST charges in ready-to-move in projects that do no have a completion certificate”, says Anuj Puri, Chairman, Anarock Property Consultants.

“For buyers, either their cost of purchase will increase, or the overall spread of options will reduce,” he says, adding that secondary property market sales will, however, improve. The burden of unsold inventory is likely to increase as buyers may look at resale units (that are exempt from GST). Unsold housing stock stood at 687,000 units in Q3 2018, an 8 per cent decline over Q3 2017. And nearly 14 per cent of this (90,000 units) was ready-to-move projects that did not have a completion certificate.


Meanwhile, the commercial real estate remained buoyant in 2018, with nearly 40-42 million sqft of space being absorbed. The supply stood at 30 million sqft. India’s first REIT listing is expected in early 2019 and this will lead to increased liquidity infusion in commercial office spaces, said sources.

“Concurrently, office real estate in most Tier I cities emerged as strong investment options for higher yields,” said Puri. Besides commercial office spaces, the retail sector also emerged as a strong segment. India’s retail sector is projected to touch $1.3 trillion in 2020. And market sources suggest that nearly 3 million sqft of area will come up in Tier 2 & 3 cities in 2019.

The cities that will see new malls opening up in 2019 include Chandigarh, Dehradun, Lucknow, Ranchi, Rourkela, Solapur, Udaipur and Visakhapatnam. Across India, at least 32 new malls are expected to add 13.5 million sqft of area. Bengaluru and NCR will be the prime attractions, followed by Hyderabad, Mumbai and Chennai.

According to Rajat Gupta, Managing Director – Advisory and Transaction Services, India, CBRE, the logistics and warehousing sector has benefited the most after GST.

Warehousing supply is expected to see a substantial increase over the next two years, too, with foreign investors and developers actively looking at investing in the sector.