The focus has shifted from luxury or premium category apartments to smaller, no-frills affordable housesAround 70% of the Indian population comes under this category of housing. Companies like Omaxe and Puravankara Projects formed subsidiaries to focus on this part of the business.
An upsurge in demand is the only saving grace for these builders. This is what prompted the RBI to declare low-cost loans as priority lending. Developers with projects in Tier-II and Tier-III cities are expected to benefit from this move.
Mumbai real estate market:Mumbai’s real estate market is a different ball game compared to the rest of India. Premium housing and slum rehabilitation are the two main categories where the majority of developers such as Orbit, HDIL and Akruti City operate.
As of now, affordable housing is missing from the Mumbai market, since land prices in this region are among the highest in the country. Thus, it is difficult for this stimulus package to impact end customers in Mumbai.
Pune and Nashik real estate markets:In other cities like Pune, Ahmedabad, Nasik and Surat, developers who have launched projects within Rs 15-25 lakh will benefit from the government’s package. Down South, property prices had started correcting earlier than in Mumbai.
Bookings!Developers were facing a major headwind in sales. However, some sanity prevailed and with reduced profit margins, property is now being sold at affordable levels.
End user:There is still some time before we see a major shift in investor sentiment and actual buying takes places in the market. In fact, some developers feel that the real estate sector requires much more than what this stimulus package provides. It is the end consumers who are now leading the demand in the sector. Though it may still be too early to gauge the actual impact of the stimulus package on real estate companies, it will definitely provide a breather to the sector.
To read more, please, visit - Stimulus package to realty cos may provide breather
Related Story:Public sector banks cut home loan rates to prop up demand
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