Real Estate Bill offers a glimmer of hope for builders but it's indeed a buyers' market

The real estate stalemate that has been going on for long will perhaps clear off quickly much to the relief of the industry people as the Union Cabinet has given its green signal to the Real Estate (Regulation and Development) Bill, 2015.

A key stipulation of the Bill, to ensure timely execution of projects, will go a long way in safeguarding the interest of consumers, and in the long run, keep the real estate markets brimming with active demand.

Mumbai real estate gains in momentum. AFPAFP

Of late, the market has been dull, lacking velocity in sales and an umpteen number of projects failing to meet deadlines. The developers have been crying about procedural delays as the major factor affecting the project execution timings.

To put it bluntly, the real estate market has been stagnant. The National Capital Region (NCR) alone has a number of stalled projects because of slow demand and certain economic factors. A Knight Frank report states there are more than 6 lakh unsold units in the country, and at the current absorption rate, it will take more than 2 years to clear even if no projects are launched.

There are reports, however, of some progress. For example, residential sales in Mumbai have climbed up. Ramesh Nair, COO & International Director, JLL India says, “The aggregate of residential unit sale in Mumbai in previous four quarters has jumped up 28% when compared to the corresponding period one year ago.”

In other regions however, sales have been sluggish across the country. According to Surajit Chanda, regional head, Sobha Ltd. (Pune), sales velocity has slowed down in the city. “The market is going through stress. And buyers are taking more time to buy. Primary demand is between 30-70 lakh segment all across the country. In the premium segment, say 1 cr and above, there is certain movement, but not as is expected,” lamented Chanda.

Pinning down one of the causes of the real estate distress, Chanda remarked, “Developers have over leveraged themselves. They picked up more than they can chew.”

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