In a television conversation with ET NOW, CEO and Co-Founder at Square Yards, Tanuj Shori, had some invaluable market insights to share. He opined that the realty market is already touching pre-COVID levels and this is the best time to get exposure to the same for buyers since prices are at the bottom. The property sector is still emerging out of a multi-year bearish market phase although the momentum is changing due to stamp duty and registration rate cuts by various State Governments, higher affordability in almost all segments and attractive mortgage rates.
Shori also stated that new projects are finding more traction across metro cities, especially due to lower mortgage rates and some launches are even witnessing inventory being considerably sold out quickly. Developers earlier struggled to clear inventory since there was a problem with price and positioning. However, with COVID-19, they are now realizing the importance of proper pricing and suitably positioning their projects to attract better demand. Hyderabad, Pune and Bengaluru are already making a comeback while other cities are recovering too according to Shori.
He also clearly stated that real estate in India suffers due to lack of supply and not absence of demand. With limited organized supply in smaller cities, they are still not showing similar trends as fast-recovering metro cities. Otherwise, they would have been witnessing mini-booms of their own too. Talking of rental yields, he stated that yields are really low in the country and with the pause in realty price appreciation, demand has gone down sizably amongst investors who do not just wish to own an asset for yields. The only way to change this is if prices go down and mortgage rates come crashing down even further which are not the case.
Commercial realty rentals will keep being an attractive proposition but not the residential market according to him. He also opined that developers are indeed facing an issue with increased pressure on their margins but slight price increases are still being lapped up by consumers whereas even 3-4 years earlier any slight price increase would lead to demand collapsing. Shori prefers to wait it out for 2-3 more quarters before calling it a resurgence of the residential market although he does feel that all the right noises are being made. He also felt that with the top 20 developers commanding the highest market share today, there is consolidation going on at the ground level, especially in terms of land acquisition. He stated that realty being a 5-7 year cycle, it is imminent that a market pick-up will take place very soon, if not this year.
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