Ficci - Ernst & Young report points out gradual recuperation Indian realty sector

In accordance with the latest report of Ficci - Ernst & Young, motivated by price corrections, softening of interest rates and enhanced liquidity, the real estate industry is on the path of recovery on the back of improved demand in the residential segment. The report stated, “After a rough phase that lasted for over a year, the Indian real estate industry is on the path of recovery. The residential real estate segment, which is leading the recovery, has witnessed a revival in demand, primarily due to improved affordability.”

Truly speaking, the two-pronged plans of the developers namely improving balance sheets and concentrating on developing self-funded projects - are now bearing results and assisting in the recuperation of the industry along with a revitalization of demand in the residential sub-segment. It is to be noted, the demand in the residential segment has perceived stimulation mainly on account of better affordability and was a result of lower interest rates, decline in property prices and the availability of small-sized affordable apartments.

Nevertheless the report hadn’t any qualms to state that the commercial, retail and hospitality segments were still clambering because of the passive demand from the IT/ITeS sectors and multinationals, which are blocking expansion plans in the country. “In the aftermath of the global economic slowdown, most retailers have deferred their expansion plans in India, since the slowdown has resulted in a decline in their revenues and profitability,” the Ficci - Ernst & Young report said.

On the other hand, since developers changed their center of attention to self-funded projects thanks to the liquidity crunch, they postponed and even cancelled hospitality projects that have higher gestation periods. “This has resulted in the widening of the demand-supply gap in hotel rooms in the country,” the report said.

In the meantime, by means of thorough evaluation of more than 60 parameters, the report ranked Delhi, the National Capital, as the most preferred destination for real estate developers and investors.

“The key factors that have helped Delhi to retain its number one positions are the fast-paced improvements in physical infrastructure such as the functional metro railway, modernization of the International airport, road widening projects and dedicated efforts to make the ring road signal free,” the report said.