Real estate to get a facelift
Real estate companies, both residential and commercial, expect the sector to grow significantly after the Real Estate (Regulation and Development) Act (RERA) takes effect. Under the Act, the sector is expected to become more organised, making it attractive for foreign investors to come in.
“The global attractiveness of the real estate sector would certainly improve with the implementation of RERA. It is an ambitious move towards a mature economy, which broadcasts a positive message globally about the Indian government’s determination to cleanse the realty sector. With the anticipation of enhanced transparency and reduced litigations, the inflow of foreign funds is set to witness an uptrend in the forthcoming quarters,” said Narasimha Jayakumar, chief business officer at 99acres.com.
He says complex regulatory mechanisms, low ranking in terms of ‘ease of doing business’, and inadequate transparency in the sector are the major impediments for investments in the sector.
The total FDI in Indian realty between April 2000 and March 2016 stands at $24.19 billion. Foreign fund inflow figures for January-September 2016 alone stood at $2.5 billion.
“RERA will make the real estate sector much more transparent, predictable and stakeholders more accountable. It will make foreign investors much more confident about investing in India. There is competition for the limited pool of global capital and investors will look for appropriate risk adjusted rewards,” said Amit Oberoi, national director – knowledge systems, Colliers International India.
According to Rajesh Joshi, managing director of ACME Group, there will be some upside as already, a lot of foreign inflows are coming into real estate. Once RERA comes in, there will be a reduction in supply in the market because today a lot of people are selling projects without anything in hand.