(By Samyak Jain, Director, Siddha Group)
2017- The year gone by
As we bid goodbye to 2017, here we review a series of landmark reforms that the country witnessed during the year. Demonetization made a huge impact on various sectors,including the real estate industry. It has brought about transparency in transactions which have helped to strengthen relationships between the developers and buyers. Itbrought about an increase in fund inflows in the banking sector forcing RBI to cut rates twice eventually leading to a reduction in home loan rates.
As India adjusted to demonetization, the government provided some relief in the Union Budget 2017-18 by granting infrastructure status to the affordable housing sector showing its intention to make ‘Housing for All by 2022’ a reality. The status grant camewith a plethora of benefits to developers such as availability of prime land parcels, access to funds along with faster approval incentivizing them to develop affordable housing projects. Further, the government also liberalized FDI rules making it easier for NRIs and foreign investors to purchase properties in the country and facilitate the generation of foreign exchange for infrastructure developments and strengthen the nation’s economy.
The implementation of RERA brought in much-needed transparency and initially infused accountability in the sector.There was ambiguity about the act and the registration processes, but as the time went by it brought in more clarity in the system. The act has not only encapsulated the interests of the home buyers but has also ensured speedy redressal of disputes which has helped gain confidence amongst the consumers. The act consists of a registration mandate, and strong penalties to ensure that the home buyers feel secure about their investments andhave further helped to enhance the residential sales. The introduction of GST in July 2017 aimed to dismantle the multiple tax system and make way for ‘One Nation One Tax’.The GST rate for real estate has been fixed at 12 percent.In near future further clarity on GST willhappen and will be able to assess. However, we feel the GST implementation willprove beneficial for the real estate as well as for the general economy in India. The domestic and foreign investor’s sentiments were escalated with a jump in India’s rank by 30 spots to secure a place among the top-100 countries on World Bank's ease of doing business ranking list.This is quite an achievement. Thereal estate market has largelybeen benefitted from the cumulative effect of these reforms which will help propel the growth of the sector going forward.
Outlook for 2018
In 2018, the expectations of the buyers and developers will rise as the sector has witnessed new government policies. The amalgamation of these policies will help the industry to be more organized and provide a boost to both residential and commercial segments. The country’s first maiden Real Estate Investment Trust (REIT) is expected to be launched in the first quarter of 2018. This would go a long way in bringinging further tranperancy in real estate and also help incurbingBenami transactions. Very soon Housing Industry Regulation Act (HIRA) will be implemented in West Bengal and we believe the real estate market dynamics will improve furthermaking real estate deals more transparent and fairer to the buyers.The volume of online transactions just a year after demonetization has increased manifolds.Digitization has paved the way for an organized approach in terms of purchasing property, land acquisition, ownership records and documentation and has significantly improved the ease of doing business in the sector. With the consolidation of these reforms there is a bright future in store for the real estate sectorand it will see a remarkable transformation in the long run.