Rating agency ICRA, in its year-end assessment of the real estate sector, has maintained a negative outlook for the residential real estate segment and a stable outlook for commercial real estate segment. It said the performance of the residential real estate segment continues to be muted owing to the prevailing liquidity crunch, high inventory overhang, weak affordability and subdued demand conditions. It added that sales traction remains slow, particularly in markets with large unsold stock such as Delhi-NCR, Mumbai-MMR and Pune, resulting in continued over-supply.
According to the report, with most of the unsold inventory comprising either units with high ticket sizes or units located in peripheral areas with weak network infrastructure, the challenges associated with liquidation of the stock are expected to continue. On the positive side, it said the sales in the sub-Rs 50 lakh segment have witnessed considerable momentum and given the government incentives for development and offtake of affordable housing units, positive trends in both demand and supply for this segment are expected to continue going forward.
Rating agency further said that with home-buyers increasingly leaning towards reputed developers with an established track record of on-time and quality project completion, larger players have been registering healthy sales and project launch levels despite the overall sluggishness in the industry. Thus, it said the market share of such developers has been increasing and this trend in market consolidation is expected to continue. It added that structural changes, including the implementation of RERA, GST and IBC, as well as the earlier demonetisation drive, have further underpinned this consolidation and have supported confidence levels among home-buyers.