A whopping 26.4 million square feet of real estate has already been sold in 2018. With four months remaining in the year, this figure is likely to rise further. Compared to the previous fiscal, there has been a jump of over 50 percent in the sale of real estate space. Besides, there has been a growth of 35.1 percent in the sales value of the area booked in comparison to the previous year.
Homebuyers prefer an established real estate major with a proven track record of project completion on time. This has led to a spurt in demand for reputed players. New launches and increasing demand for reliable projects have led to improved ground realities.
Real Estate Industry health
The organised players are likely to increase their market share. The positive impact of RERA is already on display. Substantial pick-up in demand and a steady rise in new project launches have improved the scenario. In 2018, the market looks buoyant compared to what it was just a year ago. QTS (quarter-to-sell) is a key indicator showing the number of quarters required to sell the available inventory. It is also a denominator of the recuperative status of the real estate sector. In March 2018, QTS stood at 10-quarters. In March 2017, QTS was 14-quarters. Sales velocity looks upbeat.
Collections from homebuyers
In contrast to the improvement in area and value of the new sales achieved in 2018, collections from customers nosedived by 3.6 percent – from 13,505 crores to Rs. 13,020 crores this year. Modest demand during the initial period when RERA was implemented explains this decline till March 2017.
Developers have introduced sales through multiple marketing schemes such as possession-linked plans and subvention schemes. As these projects near completion, collections are expected to rise. Developers will focus on execution to raise collections. Around 29.2 million sq ft area stands completed in 2018. It is expected that the deliveries will not decline.
New launches ahead
A sharp decline in QTS and better sales are likely to bring in new launches. In 2017, 20.4 million sq ft area was launched. In 2018, it has improved to 21.3 million sq ft. New sales have been impressive. It has been much higher compared to what it was in the last four years. As a result, more new launches are expected to come up to meet the growing demand.
RERA has proved to be a blessing for the big players and home buyers looking for genuine developers. As the market enters the phase of marked improvement, sales momentum and growing value, a slew of new launches and a plummeting QTS explain the turnaround. On a depressing note, a possible slowdown in the Indian economy due to macro factors like elections and rising interest rates is likely to somewhat dampen the process of recovery.