Affordable house projects to drive Indian real estate market in 2010

Residential projects in India have clearly emerged as the winner in 2009, helping the distressed sector to come out of the slug, according to a media report.

"The year started on a very bad note, but the end was very good. In the last three months, demand picked up substantially. It was almost four to five times more than what it was in January 2009. Prices also increased by five- ten per cent in most areas," Business Standard quoted Jitendra Khaitan, CEO, Pioneer Group, as saying.

"2009 started with a distress note, but as things progressed things improved, transactions happened and there was a considerable change in the entire real estate scenario. This was led by the housing sector," said Harshvardhan Neotia, Managing Director, Bengal Ambuja Housing Development

Amid the worst of times for developers, it was the best of times for prospective home buyers, as the concept of "affordable housing", priced between Rs500,000-Rs2 million (Dh0.158m), became a realty.

Come 2010, a host of affordable housing projects are lined up to boost the sector further, said Khaitan.

In 2009, not many affordable housing projects could be launched in Kolkata and its fringes, due to unavailability of land, as volumes play a key role in profitability out of them.

"In 2010 the residential market should improve further, driven by affordable housing projects. However, a little more subsidy from the government for houses below Rs3 million would have been a big boost for the realty sector," the paper quoted Santosh Rungta, President, Credai (Confederation of Real Estate Developers Association of India), as saying.

Another positive aspect of the slowdown was the exit of speculative buying in the real estate market.

"The demand this time has been driven by residential projects, and there is no more speculative buying." said Khaitan.

Due to the absence of speculative buying, areas such as Rajarhat are still reeling under high vacancy.

Quite of few investors, including non-residential Indians, had started investing in Rajarhat, the projected IT hub of the city.

However, areas like Garia, Behala, Howarh and Thakurpukur in city fringes drew a considerable number of home buyers instead in 2009. In spite of marked recovery, the commercial real estate sector is yet to come out of blues. Vacant spaces in upcoming commercial areas like Rajarhat bears testimony to the fact. "The commercial and retail sectors will take some time to pick up," said Khaitan.

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