Most realty experts say: Don't expect the sector to turn round soon, especially the residential segment.
While the new government has raised hopes and improved sentiments of investors, companies and experts believe a revival is at least a year away.
But commercial properties will be in demand. The property sector is expected to grow at a snail's pace. High inflation and lower gross domestic product (GDP) growth won't help much.
"I do not think the real-estate price rise will beat inflation in the next one year. It can happen in two years," said Ashutosh Limaye, head of research and real estate intelligence at Jones Lang LaSalle."
"Prices will rise steadily and not exponentially as five to six years ago." He said investors' return expectations should be in line with reality. Property prices doubled in Mumbai between 2005 and 2008."
"We are at a high base. Prices cannot go up rapidly from here," said Limaye. Amit Goenka, managing director and chief executive of Nifco, a financial services firm, said the sector will revive only after the GDP growth improves and domestic savings go up. "It will take at least a year for things to start looking up," he said. Even developers say revival is some time away."
"The ground situation continues to be challenging and demanding. It will take a few more quarters for it to improve," DLF, the country's largest developer, said in the latest analyst presentation.
Global property consultancy Colliers International expects prices to go up marginally or remain stable.
"We anticipate a stable price scenario in Mumbai and the National Capital Region due to high price points.
However, Bangalore, Chennai, Pune and Kolkata may see marginal appreciation due to increased demand," said the latest report by Colliers.
High interest rates and prices mean low affordability. Also, developers have huge inventories.
By estimates of Knight Frank, till June developers in top-six cities of the country had an inventory of 0.63 million homes.
By estimates of another, the inventory levels across most top cities have been on the rise for a year.
The absorption rate (sales as percentage of the total inventory) has been declining in most top cities.
Even the pre-sales (sold but not delivered) trend is weak. But some segments could see more action.
Colliers said most of these cities may see the launch of affordable projects.
Many are planning to launch such projects in line with the government's agenda of focusing on this type of housing.
Limaye said cities which were industry, education, and trade and commerce hubs were expected to see heightened activity in residential properties due to the government's focus on such areas.
Investors in commercial properties can also look to better days as things are picking up.
"There has been a reasonable improvement in leasing. In two quarters, we have seen 20 per cent reduction in vacancies in Mumbai, Delhi and Bangalore," said Goenka.
Limaye said rents will rise rapidly in secondary business districts due to good infrastructure, accessibility to residential areas and good buildings.
The expected launch of real estate investment trusts or Reits is expected boost the commercial segment and open a new investment avenue for retail investors. But it may be a while before action starts on the Reits front.
Though the central government had given a pass-through status for Reits in the Budget, developers said due to tax leakages, the instrument was not viable. So, till these are resolved, the sector may have to wait.
