Real estate faces new reality
The year 2016 was an inflection point for the real estate sector and with Real Estate Regulatory Act (RERA) becoming a reality, rising consumer activism and high value currency demonetisation that hit cash transaction oriented sector hard is easily a watershed year.
The next year various states will finalise and set up regulator for the sector and developers are expected to focus more on deliveries than new launches to reduce inventory levels. Home buyers will benefit immensely with affordability set to increase and home loan rates trending downwards.
“Each of these bring with them positives, which will enhance Indian real estate. April 2017 is when we expect to see market movement get back to normal. The property market will witness fast growth across segments and micro-markets in Indian real estate,“ said Niranjan Hiranandani, cofounder & CMD, Hiranandani Group.
If 2016 was a landmark for real estate from a policy perspective, with Benami Property Transaction Prohibition Act, RERA and GST as also the long term impact of demonetisation, it also redefined the way Indian real estate in the future does business from now onwards.
“The year isn’t expected to end on a healthy note. The writing’s clearly on the wall -2016 will go down as a wa tershed year in the history of Indian real estate. A major factor for this could be attributed to the policy developments by the government which in the short term have led to an unpredictable disruption, but in the long run, are projected to augur well for the industry as a whole,“ said Shishir Baijal, chairman, Knight Frank India.
According to Knight Frank India, the residential property market witnessed improved sales in the first six months of 2016. Barring Delhi-NCR, other markets did well in the first half of this year compared to previous years. Mumbai and Bangalore led the way .
“Even as the inventory overhang reduces, the three biggest markets in terms of volumes of unsold units (including under-construction) are NCR, Mumbai and Bangalore. By volume, NCR stands 37%, which is more than a third of India’s unsold (including under-construction) residential inventory ,“ said Anuj Puri Chairman, JLL India.
“With RERA becoming a reality, we will see not-so-serious and fly-by-night operators moving out of the system.Consolidation will take place now and will provide consumers better choice as developers who are in for long-term play would not like to cheat homebuyers. Consumer activism will get strengthened with RERA batting for affected consumers,“ said Anil Agarwal, a leading lawyer, who has represented homebuyers in such cases in Bombay High Court.
Developers, on the other hand, will have to adjust to the new environment and more specifically , they have to change their business model whilst adhering to stricter compliance norms.However, as of date, only Maharashtra and Delhi have come up with and notified the draft rules for RERA.
“RERA will change the way business is being conducted in the real estate sector. This is expected to empower customers immensely; there may be some misuse also. Approving authorities should give the approvals on time to make RERA a reality,“ said J C Sharma, vice chairman, Sobha.