The multi-year slack stayed on in the realty sector in 2017 as sales and new projects bore the brunt of the triple surgical strike; demonetization, RERA and GST However, builders expect better times in 2018 with the wave of affordable homes that has been brought under infrastructure tag along with other freebies.

Realty sector developers and consultants are anticipating that more houses will be sold, even though slowly, the consistency factor has dawned upon prices after essential rectification in last couple of years with more rational interest rates on home loans.

With less likelihood of new launches in 2018, the demand for homes is expected to go up and consequently more sales would bring down unsold inventory, which presently stands at approximately 5-6 lakh homes. The market can experience a major reinforcement as a large number of developers would put their assets on sale to finish their in-progress projects and cut debt.

In 2017 there was a fall in the sale of finished homes and a slack in new projects, for which real estate players blame the three policies; in form of note ban in November 2016, RERA implemented from May and GST from July.

As seen in a report by Anarock Property Consultants, between January and September 2017, the sale of homes and roll out of new projects was reduced by 30 per cent and 50 per cent, respectively, in 7 prime Indian cities, in comparison to the previous year.

Even though sales were hit, the private equity investment in real estate attained a figure of Rs 35,190 crore in January-September 2017, as per Cushman & Wakefield data.

However, to add to the agony of homebuyers specifically in Delhi-NCR, two major developers, Jaypee Infratech and Amrapali group went bankrupt. Unitech was under the spotlight for delays in delivery of projects and its promoters were even jailed.

Thousands of home buyers in Delhi-NCR have been experiencing a lot of agony with home projects, even though courts were looking at new ways to help consumers. RERA does seem like a silver lining to home buyers with its legislatives to eliminate fugitive players from this sector.

Quite contrary to the housing sector, the commercial real estate performed better and office space leasing dropped by 7 per cent as there was feeble new supply and skepticism over the protectionist policy of some nations in the beginning of 2017.

The commercial realty sector saw big-ticket transactions, spearheaded by DLF promoters’ divestment of stake in rental portfolio to Singapore’s sovereign wealth fund GIC for Rs 9,000 crore.

Nevertheless, the Real Estate Investment Trust (REITs), a mechanism to promote investment in rent-responsive commercial assets, failed to come alive for the real estate sector even in 2017.

In a rundown of 2017, realtors’ apex body CREDAI (National) President Jaxay Shah said: “The year could go down as one of the most revolutionary years in the history of the Indian real estate sector post-independence. The implementation of a number of critical reforms such as RERA and GST have initiated a new era of transparency and accountability, which augurs well for the sustainable development of the industry.” According to him, the demand for both home and commercial real estate is on the rise.

Low-priced housing, which was brought under the infrastructure status in Budget 2017, will fuel the growth of real estate in 2018, considering the endeavors and backing of the government. Affordable interest rates would help boost demand.

“Real estate developers are unlikely to forget 2017, which was like a bad dream come true, and look forward to better business in 2018,” ANAROCK Property Consultants Chairman Anuj Puri said.

“With a massive focus now on affordable housing, this segment will be the poster boy of 2018,” Puri added. However, he believes that 2018 may not differ much from 2017 as unemployment and sluggish GDP growth rate has been detrimental to the consumer mood. Besides, Puri said interest rates are likely to go up from second half of 2018, because of inflation.

CBRE’s Chairman (India and South East Asia) Anshuman Magazine said: “As the cloud around the RERA implementation settles, we expect overall activity to gain momentum in the coming months.” The cooperative attempts in the direction of affordable housing may possibly cause more private players to step into this sector, he added.

Knight Frank India CMD Shishir Baijal called 2017 a year full of doubts, unpredictability and futuristic assurances of new opportunities. The array of reforms in the realty sector tried the market’s stakeholders, he said, adding that buyers became circumspective, while developers were more inclined to understand the new laws and then yielding to them.

Nevertheless, Baijal said the new exemplar of transparency and integration that came in as a package would favor in attracting dynamic global capital in the times to come.


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