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Housing and Realty: No Investors for 'Be-ghar Sector'

25 Oct 2019

The real estate sector has been one of the most long-standing hedge against inflation and helping people grow their money multifold only on the basis of three vital factors - location, location and location!

It is quite common to see some open plots in crowded residential localities strategically left empty by some investor who purchased it long ago to allow it to turn into gold. However, for the residential segment of real estate, those days of investor owned properties are now bygones as housing project developers and builders are facing difficulty in finding investors who want to put their money in the sector just to let it grow instead of actually using the property for personal use.

The residential housing segment of real estate sector has hit a rough patch in the recent months as banks and NBFCs have turned their back on them, despite the push by the government to ensure housing for all. Experts from the real estate sector attribute this to many reasons.

Some are listed here:

1. Lack Of Last Mile Funding

Many real estate projects have either taken too long to finish their construction or have not received their last mile funding to complete the projects began. This has greatly waned the interest of investors who wish to invest in residential properties and also make is a steady source of income for them.

2. The Problem Of NPAs

The recent fallout of Dewan Housing and Finance Limited was an alarm which sent warning signals among the sector. This also forced the government to consider putting in a new framework for resolution of insolvency and handling bad debts. The prime reason was that housing sector and builders could not return the money taken by them on loan as the properties were not getting sold to investors.

3. Preference Of Liquid Investments Over Illiquid Ones

It is a well know fact that real estate investments are often not very liquid and may take weeks months or probably years to be liquidated. With the availability of newer investment options and tools, investors are looking for a place where they can get liquidity easily.

These are a couple of reasons which have resulted in the transformation in which real estate projects are being purchased directly by end users who want to live in the houses and will be using it personally. This coupled with the government boost for cheaper housing has made houses accessible to all shifting people from rental property to owned properties. However, for the investors, the focus is increasingly shifting on liquid assets such as share markets or derivative markets.

The stock markets have been on an upside with short term corrections since the government announced the corporate tax cuts on September 20.  The corrections which were witnessed in the last few days of September were reversed in the second week of October 2019, as markets regained a strong footing around 11,500 for the Nifty 50 index.

In such cases, to find the best avenue for investments, a certified investment advisor can help you plan your moves in the markets well and earn profits in the volatility.

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