Commercial office real estate flourished and remained the top-ranking real estate asset class in 2019, while residential continued to struggle due to funding crunch, according to a recent survey. The data published by Anarock reveals that towards the end of 2019, more than 72 per cent of the total loans advanced to Grade A builders (around $65 bn) are safe and stress-free, while Grade B and C developers collectively accounted for USD 28 bn of the total loan advances.
“In 2019, real estate drew considerable fire but failed to display appreciable growth. The seeds sown in 2019 are expected to bear visible fruit in 2020,” Anuj Puri, Chairman, Anarock Property Consultants said.
As per the research, the housing sales value of India’s top-9 listed players touched INR 10,800 crores in the 2nd and 3rd quarters of 2019, amounting to a 5 per cent Q-o-Q growth. Despite the announcement of the alternative investment fund (AIF) of INR 25,000 crore to facilitate the completion of stuck affordable and mid-segment homes, smaller developers continued to perish due to extreme financial constraints.
“The liquidity crisis gave no respite to the housing sector. Private equity inflows in residential real estate remained subdued, with major PE funds focusing on the commercial segment,” the research noted.
Further, average housing prices in 2019 maintained status quo across the top-7 cities, with a minuscule 1 per cent yearly gain in MMR, Pune, Bengaluru and Hyderabad. NCR and Chennai saw no change at all, while Kolkata saw a 1 per cent decline in 2019.
Overall, housing sales in 2019 saw a modest 4-5 per cent annual growth, with over 2.58 lakh homes sold during the year, while new housing launches in 2019 saw 18-20 per cent annual growth.
“The consumer spends took a major hit in 2019, both in terms of purchase volumes and ticket sizes. Inevitably, overall retail leasing activity reduced drastically by as much as 35 per cent in the top 7 cities alone,” the research noted.
Further, Anarock expects 2020 may bring revival on Indian real estate. It expects more consolidation and mergers, and some large stuck realty projects be revived by government funds.