There has been some turmoil in Indian real estate over the last few years but if experts are to be believed, the sector may actually find itself on a firmer footing in the wake of the latest developments. The demand for property in India, though on the slower side, is showing signs of revival in recent times backed by policy measures of the Government including RERA and the PMAY scheme for affordable housing. In fact, the Government’s emphasis on Housing for All by the year 2022 and its thrust on affordable housing explains the steady revival in demand for residential property India in recent times. With measures like demonetization followed by RERA and GST, the real estate sector has been undergoing a clean up of sorts which is also attracting investors.
A recent report from CREDAI (Confederation of Real Estate Developers’ Associations of India) has highlighted the impact of GST, RERA and REITs (Real Estate Investment Trusts) on the market. According to the report, these measures will spark higher demand for real estate India through more transparency, better investor sentiments, increase in the organized sector’s share and better confidence of consumers. The unorganized sector will be better regulated while ease of doing business will be greatly enhanced. Affordable housing will now be the major growth driver for residential real estate India along with the Pradhan Mantri Awas Yojana which aims for housing for all by the year 2022 in a scenario where urban India alone suffers from a shortage of 20 million affordable housing units.
The smart cities mission, Atal Mission for Rejuvenation and urban transformation scheme offering amenities like sewerage, water supply and transportation should work wonders in scaling up demand for India property. According to SquareYards, more and more developers will now be incentivized for coming up with affordable housing projects and this will create more supply, in turn raising demand. Banks have already cut their lending rates and are going all out to lure customers to invest in affordable India properties. There could not be a more favorable environment to buy property in India with the interest rates at their lowest levels in many years and the PMAY benefits for low-income and mid-income buyers alike. There are several investment opportunities available at present across major cities as seen on SquareYards.
There are predictions of at least $7 billion in investments entering the Indian real estate sector this year from offshore equity investors, HNIs and leading corporates. There is now 100% exemption in service tax for affordable housing along with the coveted infrastructure status. The increase in the abatement period to 5 years and increased exemption limit on interest outgo on home loans are measures that will help developers and customers alike. The CLSS scheme links home loans to the MCLR for ensuring that customers get benefits of rate cuts by financial institutions. The Benami Property Act is another good move along with the budget allocation of Rs.23,000 crore for rural housing in 2017-28.
Another Rs.29,000 crore has also been allocated under the Pradhan Mantri Gramin Awas Yojana. These policies will help in swifter realization of the initial goal of 10 million homes by the year 2019. GST will also help in shifting focus of developers towards EWS (economically weaker sections) and Lower Income Groups from the high and middle-income segments. Developers can pass on the input tax benefits to buyers under GST since deductions of land value have been allowed equal to 1/3rd of the total amount that is charged by the developers. Warehousing and industrial realty segments will also benefit with more efficiency. In the near future, real estate developers can certainly claim input credit under GST and get taxes paid by suppliers, thereby lowering the tax burden on customers.
All these measures coupled with the thrust on affordable housing, should definitely boost demand for homes in both tier-I and II cities in the country along with other rural markets. There could also be a growing trend of joint ventures amongst unorganized sector developers and leading housing brands for projects in this space. Overall, the real estate sector in the country does find itself on a stronger footing with ample growth opportunities to come in the future. If developers can work out the operational frameworks and evolve business blueprints accordingly, the sky is the limit when it comes to future growth.
SquareYards is one of the leading real estate investment advisory solutions across the country, offering an extensive asset and property portfolio from the best developers worldwide. SquareYards takes care of investor interests across both commercial and residential segments and has already enabled investments exceeding $1 billion globally over the last two years.