It was a mixed bag of a year for the real estate developers in 2019. While commercial real estate did exceedingly well across geographies, residential real estate did not share the same enthusiasm.
t was a mixed bag of a year for the real estate developers in 2019. While commercial real estate did exceedingly well across geographies, residential real estate did not share the same enthusiasm. In the process, few developers have started focussing more on real estate and some have stopped looking at residential developments for the time being. The surprise in commercial real estate was emergence of Hyderabad as the 2nd largest office space absorption market speeding past much bigger cities like Delhi and Mumbai.
Within the residential real estate segment, affordable housing has been the mantra for success and most developers are looking at building a portfolio of affordable housing. Among the other asset classes in real estate, that has been attracting most eye-balls in terms of plans is the warehousing and logistics sector. 2019 would perhaps be best remembered in terms of real estate by the way of first REIT listing in India. It took a long time, however no one seems to be complaining. Investors in REIT are sitting on pretty gains and ones who could/did not buy are ruing the lost opportunity. 2020 should see more traction in this space on the back of another REIT listing in the first quarter itself.
What started in 2018 by the way of IL&FS fire, engulfed the whole NBFC space in 2019 and created capital constraints for all real estate players and this would be one of the worst years in the recent memory. For the wrong reasons, 2019 also could be remembered as developers being dragged to the NCLT by the dozens. What we missed was a real estate IPO in 2019, unless one counts Chalet Hotels, which was a hospitality IPO really and of course the REIT.
Looking forward to 2020, the commercial real estate momentum to continue, with Bangalore ruling the roost. Once the supply side gets its act together, both capital as well as project completion, one can look forward to a better 2020 for residential markets too. The developers want input tax credits in GST, leeway in loan repayments, availability of credit while the consumers want completed apartments. There seems to be a large appetite for REITs, and we can look forward to seeing more than one REIT listing as well.
Among steps from the government, one could expect them to push Aadhaar linking with properties, sort out the NBFC mess, etc. Urban Infrastructure surely is showing signs of extreme stress and is crying for attention. If there is just one expectation from the governments/government bodies, then Urban Infrastructure needs to be on the very top of the list.