2016 was a big year for the Indian Economy and Real Estate Sector of India with many unexpected things, policy changes, new rule & regulations. Now we all are preparing for 2017 with some expectations with budgets and trends that defined the past 12 months.
1. Various policy transformations shake the market, but real estate experts agreed over their long-term optimistic implications
The year 2017 started with some expectations and cheerfulness with the union budget declaration that seeks to set in place the foundations for a strong economy in the long term by practical financial supervision. At the same time as the entire economy was going through the policy modification, realty sector grabbed the headlines caused by many policy level alterations. Many real estate policies, regulations and decisions that was well thought-out to have the prospective to completely change the way real estate sector work are – Real Estate Regulation Act 2016 (RERA), Benami Transaction Prohibition (Amendment) Act 2016, amendments in Real Estate Investment Trusts (REITs) regulations, Goods and Services Tax (GST) and Demonetization. Adjacent to these, many other declarations seemed to be made in the passing but are very decisive for the India Real Estate Sectors. These were the plan to digitize land documentations, change in arbitration norms for the construction industry and creation of a government board to have a look at the considered sale of government assets that comprise land and manufacturing units. All these policies & changes are supposed to be the game changers for the realty industry in coming days.
2. Commercial Property market done well in 2016 and future are bright in 2017!
Amazingly, commercial sector remained untouched from all these changes as well as from the slowdown in the market and done excellently this year. IT sector driven markets has done very well this year particularly in Delhi NCR that managed to magnetize major IT companies in Gurgaon & Noida. Gurgaon sustained to be its expansion course and uphold its number one rank among all the key cities of North India. Old supply was not equal to cope up this extensive demand and resulted in amplification in office rents in most of the cities. We look forward to an upward pressure on rents at least in the first 2 quarters of 2017.
3. The evolving home buyer
Even if it’s very hard to forecast the real estate sector’s journey through the New Year in exacting detail at this point, home seekers’ first choice for established developers with excellent track record and good control framework will likely support in this year. As well as with low liquidity in the market prospective home buyers will prefer affordable or low costing homes from the branded real estate developers. And the shortage of cash in the market & recent revision in the rate of Home loan Interest will attract more & more people to buy home with the home loan. Real Estate Experts also believe that Delhi NCR market is growing and will be more and more end-user driven, going ahead. In actual fact, over the past two-quarters or so, end users have been aggressively chasing options, with closure price improving for reasonable price projects in Noida.
4. GST
A significant and game-changing transformation that values special mention is GST or Goods and Services Tax, expected to be rolled out shortly. When applied, GST will include a range of central taxes and state-level charges and could gain the country in the long term, in place of a long tax base and better contribution in the formal economy.
5. Sustainable urban development
Green buildings or Green Residential & Commercial Developments that are resource conscious are finding more & move favor from the buyers in big cities. This concept using of methods that are environmentally accountable and resource-efficient the whole time a building's life-cycle: from sitting to plan, production, operation, maintenance, redecoration, and destruction.
And up till now, India’s cities have a very smaller share of green developments projects, in comparison to other western countries like USA, UK, Germany & France etc. So there are lots of scope for Green Buildings in India and many real estate developers already introducing this concept in Delhi NCR. And in 2017 Green Development will be a buzzword for the NCR real estate.
Overall long-standing outlook is positive!
Even if it’s very tough to forecast the realty market that is highly sentiment driven in India, a number of factors will compel the future trend. Recent demonetization that became the headlines and a most controversial subject of the history is one of the important factors that may drive the instant trends. While everyone assured that this would help the India financial system in the long term, the short-term effects were little bad for the residential property sector as the total transaction volume comes to a halt. Commercial real estate which is still un-impacted by the demonetization force may also see an impact in the form of lack of supply and amplify in rents.
Numbers of deals in the residential properties will remain constrained, but the recent oversupply will be reduced in the coming months, as very few new residential projects are being launched. Yet, things are looking up in the coming year, with end users may start looking the market again.
In general, after a while the recent changes at regulating the economy are expected to raise transparency & faint and the capacity to magnetize institutional capital across industries and sectors, in spite of some primary short-term chaos. As a result, we believe that the real estate India sector will materialize stronger, better and competent of long periods of constant growth, provided ample policy/regulatory support.
