Getting Nostalgic & Making Memories Matter: 2018 comes to an end and brings with it a new beginning
Another year comes to an end and brings with it a new beginning. Here are the top 10 happenings of the year that rocked the sector.
Text: Sapna Srivastava
For the real estate sector year 2018 was a mixed bag. While it threw a few challenges, along the way the year also brought some moments of rejoice. Realty+ recounts the hits and misses of the year gone by.
No more entry barriers for foreign single brands
The year started on a good note with the government deciding to permit 100 per cent FDI under automatic route for single brand retail trading. Large global retailers would now accelerate their entry plans in India raising demand for real estate and allied services. What’s more, the Union Cabinet also declared real-estate broking service as not amounting to real estate business and therefore eligible for 100 per cent FDI under automatic route.
Preferential status eludes affordable housing
Infrastructure status to affordable housing to ensure lower borrowing rates, tax concessions & increased flow of Foreign & Private Capital as announced by the government failed to make any impression on ground. Even after one year banks are yet to treat loans to budget housing as loans to infrastructure. Furthermore, to avail reduced GST for affordable housing projects, there is no clarity on the definition of affordable housing or how to get such a status. Also read http://realtyplusmag.com/meeting-challenges-through-innovations-the-maha-metro-way/
India at world’s centre stage of design
The day of glory came for India when Indian architect, urban planner, and educator Balkrishna Vithaldas (BV) Doshi won the 2018 Pritzker Prize, the highest accolade in international architecture. Having worked with two masters of the 20th century: Le Corbusier and Louis Kahn, Doshi at 90-year of age is the oldest ever recipient of the prize and is also the first winner from India.
India’s retail sweet-spot attracts global giants
Walmart made a backdoor entry by acquiring Flipkart for $16 billion in world’s largest ecommerce deal. As the world’s largest retail giant pours funds, it will boost investments, job creation and logistics & warehousing sector. IKEA that had been sourcing from India for its global stores for more than 30 years finally opened its first retail store in India targeting one of the world’s largest consumer markets. Not to be left behind, Amazon opened its largest ‘fulfilment centre’ in Karnataka, spread over 3,50,000 square feet with nearly 2 million cubic feet of storage space. Amazon India future plans to open more than 50 fulfilment centres in 13 States across the country is a good news for Indian realty sector. .
Sigh of relief for home buyers
The vulnerability of home buyers in insolvency cases like Jaypee Infratech and Amrapali has finally been addressed by empowering them as financial creditors that was largely the prerogative of the financial institutions so far. Under the Insolvency and Bankruptcy Code (IBC) amendment passed this year, home buyers will now have a place in the Committee of Creditors (CoC) and will be a part of the decisions on the future of the bankrupt real estate developer.
Tragedy strikes God’s own country
The worst flood in nearly a century lashed the south Indian state of Kerala in July-August. Even as Kerala grappled with its worst-ever calamity, Centre Rs 260 crore and later additional Rs 500 crore as relief was slammed by citizens across the country as overlooking the scale of the disaster terming it as government’s political bias against the state. Also, the disaster once again set of the development v/s environment debate and the critical necessity of effective planning of our cities to pre-empt the consequences of natural disasters.
A cloud with a silver lining
India’s rupee slide to a record low of Rs 71 to the dollar caused much an upheaval in the financial markets but the depreciating Indian rupee also attracted hordes of NRIs to invest in residential properties in India. The industry statistics point to nearly 15-20% surge in serious NRI-specific inquiries for properties in India this year.
Real-estate recovery bubble burst
Come mid-year, the slight recovery of real estate suffered a major setback following the NBFC and banking sector meltdown. The blow up at IL&FS, which led to the domino effect of tightened scrutiny and lending at NBFCs, caused an acute liquidity crisis in the realty industry. In such a scenario, developers which have trimmed debt or have reasonable presence in commercial, retail, or mid-income housing, where growth has been higher will weather the challenges.
Statue takes precedence over IITs and IIMs
On October 31st India inaugurated the world’s tallest statue in the remote corner of Gujarat with much fanfare. But many questioned the wisdom of spending 29.9 billion rupees – much of it public funds on the 182m-tall sculpture of Sardar Vallabhbhai Patel and displacing local tribal groups with special protected status. The statue is more than twice the size of New York’s Statue of Liberty and dwarfs the 128m-high Spring Temple Buddha in China, the world’s next-biggest statue. Government’s claim of growth in local economy due to increased tourism is yet to be verified. Also read http://realtyplusmag.com/can-3d-printing-change-the-way-we-build/
One nation, one tax’ goes awry for real estate
The sour ending of the year was the announcement of GST on ready-to-move-in projects that do not have completion certificates. Already struggling with the tax calculations and ITC pass-over of the GST regime, the new development adds to the woes of buyers, as well as the developers.
Looking at the Bright Side
The lows and highs of the year had the industry speculating on the pending growth of the real estate but most industry players have chosen to keep their hopes high. Dr Niranjan Hiranandani – National President- NAREDCO stated that the liquidity crisis NBFC blow, locking up of 70% funds in escrow and postponement in logging sales to save tax burden on under construction property have created urgency to source out alternative fund avenues for the on-going projects. CREDAI President Jaxay Shah said the housing market is recovering post demonetisation, RERA and the GST that had an adverse impact on sales. He demanded that the GST rate should be brought down from 12 per cent currently to boost sales of under-construction homes.
Giving his perspective on the optimistic developments of 2018, Amit Wadhwani, Co-Founder, Sai Estate Consultants Chembur Private Limited recounted, “The introduction of FDI has introduced many business and job opportunities. The improved Ease of doing business ranking has put India on the global investment map and with REIT in place influx of cash flow in the sector will create conducive environment for investment”. Ar. Yatin Patel, Founder Director- DSP Design Associates | Education Design Architects (EDA) presenting a confident scenario mentioned the better performance of the Construction & Building sector with the simplified approval processes across India and international entrants in the building materials segment fostering competition in terms of technology , cost efficiency and optimized timelines.
While the CREDAI-JLL study has reported 25 per cent increase in housing sales, according to Knight Frank India, the sales growth in eight major cities rose slightly by 3 per cent to 1.24 lakh units. CREDAI Chairman Getamber Anand attributes the upswing to improved buyers confidence with the implementation of RERA and Parveen Jain, CMD Tulip Infratech lauds the governments major emphasis on the sale of ‘ready to move in’ homes, affordable housing and opening of new transport corridors, expressways, flyovers, roads and bridges and an ever expanding Metro network. Also read http://realtyplusmag.com/millennials-from-tier-ii-cities-are-aiming-big/
While back-to-back rate hikes earlier in the year dampened the buyers’ sentiment, the recent RBI the status quo on Repo rate will help reinforce the confidence of homebuyers. Today, India has jumped 23 places to ranks at 100 in the Ease of Doing Business Index amongst 190 nations, but no such improvement is visible in real estate; however the liberal economic policies are attracting many a global corporation to set shop in India and driving NRIs to invest in Indian residential real estate.
Finding solution to liquidity crunch and lowering of GST are some of the ways to get the sector back on feet and sprint. Fortunately, the consumer confidence is on rise in correspondence to the rising transparency in the real estate. Building on that foundation set by the year 2018 and the potential increase in economic activities and need for space, the industry is hopeful of good fortunes in next year.