RERA has led to large-scale consolidation of real estate assets
DeMo, RERA and GST struck at the very heart of the previously unregulated practices prevalent in the Indian real estate. RERA, in particular, has been responsible for smaller and often unscrupulous developers taking a major hit not only in terms of existing business but future business viability.
This is largely because of the radical change RERA has enforced in terms of the ways in which real estate business must now be conducted. From the need for verified documentation to the increased complexity of business operations and the compulsion to upgrade their billing systems, most smaller players were initially clueless about how to proceed.
Not surprisingly, Indian real estate post-RERA has witnessed major consolidation. Lower sales coupled with financial incapability also prompted several small-size developers to either exit or consider consolidation via mergers, acquisitions, and joint developments with organised bigger players.
The elimination of pre-launches and the associated ‘rolling’ of funds collected from customers from one project to the other have come to an almost complete halt under RERA. This has exacerbated the liquidity crunch of smaller developers.