The bullish real estate?

Real estate has been a story of stress and trouble for many years in India. Of course, there have been large deals and regulatory advancements along the way, but the overall commentary has revolved around piled-up inventory, unsold flats high debt of realtors, consumer activism, litigation, and developers falling by the wayside.

In terms of numbers, out of some 2,000 corporate insolvency resolution processes, more than 4.30 cases were from the real estate sector last year 2022. The pandemic-induced lack of demand was cited as the primary reason. Another set of numbers showed unsold inventory of housing units. Exactly one year ago, developers had an unsold inventory of around 785,000 units across eight major cities.

What has changed for the property market to adopt a bullish flavor? The reasons are somewhat hazy, except that builders (mostly the bigger, more reputed ones) are able to sell houses and plots very quickly, prices are appreciating at a ace not seen in about a decade, and there’s money flowing into the system.

Not surprisingly, an otherwise routine house sales report by real estate consultancy Anarock made people sit up. It said home sales in the top seven cities of India reached an all-time high of 120,280 units between July and September 2023- a 36 per cent increase from 88,230 units in the same period last year.

If this points towards robust demand, it is worth noting even the supply was up 24 per cent, from 93,940 new unit launches in July-September 2022 to 116,220 during the same period this year.

Another important data point capturing an uptick is that both “affordable” and “luxury” segments have seen higher sales. A recent report from Knight Frank even went on to say that the sale of luxury homes (over d1 crore) crossed that of affordable home (below Rs.50 lakh) for the first time in India during the July to September quarter, pointing to big deals involving big bucks.

Estimates suggest a potential threefold rise in property prices in two three years in some of the big cities in India. Investors are said to be returning, as opposed to an end-users’ market in the last few years as real estate returns have zoomed.