by Anushree Ghosh
The tumultuous year 2017 would remain in the conscience of people for umpteen reasons. Several major decisions have been taken to change the course of action in the real estate sector. The year began with the consequences of demonetization and the sector was hit hard by stagnancy. The momentum of sales fell and inventory started piling up. The constant highs and lows made the sector highly unpredictable and investors remained skeptical throughout the year.
Here are a few points to analyse the consequences of some major events that took place in 2017.
Three major announcements in the low-cost residential sector:
A. Low-cost houses were given infrastructural status by the government. This has narrowed the gap between supply and demand for the construction of such projects. Also, the decision aided accessibility of loans for developers and buyers.
B. Housing for all by 2019: Finance Minister, Arun Jaitley announced that 1 crore houses will be built for the homeless.
C. Developers who take up such projects were given income tax exemption. The maximum duration of the project was extended to five years after the commencement.
The above three decisions increases our expectations of narrowing the economical gap in the country.
- Introduction of RERA (Real Estate Regulatory Act): In order to systematize the real estate sector, the government introduced this act in order to ensure the timely delivery of the houses to the consumer. This surely was an act to bring transparency in the sector but the execution on the part of the concerned authorities was seriously flawed that led to confusion.
- Introduction of GST: Taxes like VAT, service tax, registration charges created perplexity as they differed from state to state but GST brought all these under one umbrella to simplify the process. This removed all indirect taxes on the ready to be sold properties.
- International Brands: With the current government’s liberal FDI policies, numerous international brands tried to occupy spaces in the country. Properties were in demand to be taken on lease by these brands. Rentals have gone up marginally, while we witnessed brands sharing their working spaces.
- The growth of Industrial Real Estate: 2017 observed tremendous growth in the industrial sector. JLL India, Canada Pension Plan Investment Board (CPPIB) invested on a venture in IndoSpace, real estate body of the Everstone Group. Many Asian countries also showed considerable interest in investing on Indian industrial sector.
To round up the overall happening of the year, we can say that the sector has observed several ups and downs and for the real estate to grow substantially we need the authorities to be more directive and responsible. The tier I cities are struggling from the overburdening inventories, while Tier II cities witnessed a steady investment due to relatively lower property prices.
Although, the government tried to bring transparency in the real estate sector, we are yet to know the results in the long term. The positives can be expected only if the execution is administered.