India's property market, saddled with abandoned projects as developers struggle to get money, is predicted to moderately bounce back over the coming year on government's plans to unblock the market, a Reuters analysts poll found.
The government approved a 100 billion Indian rupee fund earlier this month to help clarify incomplete projects, with a further 150 billion rupees from government-run financial institutions.
While the administration stated the fund will revitalize more than 1,600 moribund accommodation initiatives, that might not be sufficient.
"It is a question mark if the proposed fund would serve to unfetter all this stock. Financing options, including banks and non-bank financial firms, have run out and buyers prefer commercial property," said Anuj Puri, president of ANAROCK Property Consultants located in Mumbai.
Thirteen out of 16 respondents who replied another question also stated that India's housing market performance was more expected to recover over the coming year.
National average prices would increase from November 6 to November 19 Reuters poll projected 3.0 percent next year and 4.3 percent in 2021, an improvement from 2.0 percent and 3.5 percent expected three months ago.
While these were the most hopeful calls since polling started for those periods, it would be a feeble rebound for a sector that clocked double-digit yearly house price growth in late 2016 before the government banned high-value cash bills.
The Indian real estate market, struck by a serious liquidity crunch over the last three years despite a number of debt defaults by high-profile non-bank finance firms, has yet to rebound from that shock ban entirely.
The amount of cash transactions stays very high in India's real estate sector.
"We expect the liquidity crisis to proceed to have an impact on more players as well," said Rohan Sharma, Delhi-based head of research at Cushman & Wakefield India.
"Some developers who are stranded or waiting for additional tranches of creditors ' negotiated funds could face working capital problems that could lead to more market pressure." House prices in the southern cities of Bengaluru and Chennai are expected to rise by about 2% over the next two years. In the north, property prices are expected to stagnate in 2020 in Delhi, the National Capital Region (NCR), and Mumbai.
Tags : India property, ANAROCK Property Consultants, National Capital Region (NCR), commercial property,