The beaten-down real estate sector may take a hit, as the Economic Survey 2020 urged real estate firms to reduce prices so that banks and NBFCs could get relief and they can clear up the unsold inventory faster.The Survey said the governments thrust on affordable housing is a clear attempt to boost the real estate sector and consequently construction activity in the country.Higher investment in housing by households may increase fixed investment in the economy.
Existing unsold housing inventory can be cleared up and balance sheets of both banks and non-bank lenders can be cleaned up if real estate developers show willingness to take a hair-cut by allowing house prices to drop, the Economic Survey said.The BSE Realty index advanced over 1 per cent on Friday, with Indiabulls Real Estate gaining the most at 4.80 per cent.
It was followed by Mahindra Life (up 2.68 per cent), Prestige Estate (up 2.42 per cent) and DLF (up 2.22 per cent).
On the other hand, Omaxe, Godrej Properties, Sunteck Realty and Oberoi Realty slipped between 0.19 per cent and 2.10 per cent.Analysts said the Budget does take cues from the Economic Survey.
The Survey basically focuses on what has been done and gives observation for the coming period.Will it lead to any unfavourable announcement for the sector in the Union Budget? Market experts hold a mixed view.I believe there will be a significant negative development in the Union Budget, as far as realty prices are concerned.
There could be direct or indirect measures to contain the prices, said G Chokkalingam, Founder, Economics Research and Advisory.Independent market analyst Ambareesh Baliga said this is only a piece of advice to real estate developers.
There cant be further negative for real estate in the Budget, because it has already been beaten down.
Any further pessimism will increase NPAs.
Investors should stay on the sidelines till the emergence of any green shoot, like a price rise.