Investments in residential real estate fell sharply in H1 2019: FICCI report
Mumbai: Investments in residential market have continued to decline at an alarming rate over the last two years due to a slowdown in the sector, said a report by industry body Federation of Indian Chambers of Commerce & Industry (FICCI) and Vestian, a property advisory firm.
According to the report ‘Real Estate Investment in India’, the first six months of 2019 saw just about nine deals in the residential segment compared with a record 41 deals signed in the second half of 2016.
The value of investment in the residential segment has also continued to drop since the second half of 2016. According to the report, a total of around $450 million worth of investment was made in the sector in the first six months of 2019 as against $1.2 billion in the year-ago period.
In the second half of 2016, the sector saw nearly $2 billion worth of investments, a record.
“The residential segment has been on a declining trend, which can be attributed to the housing market owing to several stringent factors, particularly relating to the reformatory measures impacting the market players,” the report said.
Besides, liquidity crunch, delayed projects and reduced buyer interest have created a lull in the residential market, thereby resulting in slackened investors interest, it said.
However, commercial real estate market has remained the most preferred segment for investors during the period of 2015-2019. The segment has been steadily accounting for the maximum amount of real estate investment since the second half of 2016.
The report attributed the trend to availability of grade A commercial space and reasonable rentals coupled with lower vacancy levels in major cities in the country.
However, investment momentum slowed down in the latter part of second half of 2018 and early first half of 2019 due to general elections, the report said.