As we buckle up to bid adieu to another year, 2017 would easily pass for a watershed year for real estate industry. It clearly signifies that the preceding year of 2018 will be marked for the roll-out of path-breaking policies like RERA and GST. With the enforcement of demonetization in the Indian economy, Real Estate Investment Trusts (REITs) was unable to take off and the sector saw an expected slowdown. Affordable housing emerged from the shadows and the market of reasonably-priced units have been expanding in most cities ever since.
With the landmark year for realty sector drawing to a close, it’s the perfect time to review the key events from this year and take a glance at some of the forthcoming trends in 2018.
Impact on Small Developers
Smaller-sized companies or developers that are operating in real estate industry, observed their revenues decline majorly in the September quarter. The realty activities in India started to decelerate after the implementation of Real Estate (Regulation and Development) Authority Act (RERA), 2016, in the month of May this year.
However, the REITs are braced to offer investment opportunities to smaller investors in the coming years. The real estate market of India is poised about the impending medium-to-long term growth, with assured further consolidation and higher transparency. Moreover, the Tier 1 Indian cities are anticipated to climb up from their present 2018 JLL’s 36th rank in Global Real Estate Transparency Index (GRETI) as a result of constant improvements in structural reforms. Structural reforms indicate the implementation of RERA and GST, that were introduced with an objective to transform India into a modern economy.
Impact on Big Developers
Given the varied aspects impinging on the operating activities of the realty giants, the only means we could infer that GST had affected their performance was if the operations of smaller developers had been affected in the September quarter, while the big giants seemed unaffected.
But that did not transpire in reality!
‘Real Estate may see investment from financial institutions’
As per Anshuman Magazine, chairman CBRE India and Southeast Asia, the real estate sector in the country is anticipated to witness an investment inflow from financial institutions, including Pension and Insurance funds. The investment inflow will be a result of dwindling interest rates in addition to sectoral reforms like implementation of Real Estate (Regulation and Development) Act (RERA), in the coming days.
Magazine added that such regulations are going to impact positively on the sector, while the interest rates are going to play a key part in the future. And since the rates are declining, the invested funds in the sector will have to make sure that investors get good returns.
The positive impact might not be visible in the immediate future, but in the long run, insurance and pension funds along with institutional investments will ultimately look towards the realty sector for great returns. While throwing light on 2016 demonetization’s impact on realty industry, Magazine showed his expectations to be higher from now on.
With the intent to see the country on the path of growth, the policy initiatives taken by the state government will act as a booster to India’s real estate sector.