The bill boards along the roads to major towns are again displaying housing ads in the new year. Developers feel that it is best to forget 2012 and expect that strong underlying fundamentals, several initiatives by the government and price corrections will take real estate sector on an upward trajectory during the year 2013.
But for buyers the big news this year is that of a de facto regulator emerging for the sector. The Competition Commission of India is understood to be investigating about 70 developers across the country for abuse of dominance.
The Commission has already modified the buyer-seller agreement for DLF in two projects in Gurgaon. And this order is a follow through of its order in August last year imposing a stiff penalty on the real estate company.
These are the news that could reverse the slowdown in housing credit in last calendar year. From January 2012 through to the end of the year, housing credit from banks has risen only 8.6 per cent. The positive element is that is marginally better than 2011. The ever increasing cost of inputs, inflation and a weak job market has dampened the demand for houses.
Post the CCI order it will be interesting to see if prices of property correct.
There have been a few infrastructural and financial initiatives started by the government last year, which will begin to show positive impact and act as catalysts for new projects in 2013.
Greater Noida metro rail network, and the proposed metro link in north-west Bangalore as well as on-going metro rail, Outer Ring Road, Extension of MRTS etc. projects in Chennai are expected to have a positive impact on the residential real estate sector of these cities, says Anshuman Magazine, CMD, CBRE South Asia, a real estate consultancy.
The government seems to be serious about launching National Investment Board which will enhance infrastructure spending. The Parliament has recently approved FDI in multi-brand retail which will boost the retail realty segment initially and benefit developers as well as consumers.
The decision by the RBI to allow entities such as the National Housing Bank (NHB) and housing finance companies (HFCs) to be included as eligible borrowers for financing low cost housing projects is a welcome move. Widening External Commercial Borrowings (ECB) limit is considered attractive, as its cost of capital is lower than that of domestic borrowings. It could be a preferred source