One Year of Policy Making

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Key policy decisions like GST, RERA, Smart City, demonetization etc. being taken in 2016, Indian real estate sector expects healthy sales and timely delivery of inventories in 2017

By Asit Manohar

Being one of the major contributors into the Gross Domestic Product (GDP) and allied to more than 25 allied industries, year 2016 would be considered year of key decisions like GST (Goods and Services Tax), RERA (Real Estate Regulatory Authority), Smart City Projects, demonetization etc and many more in the pipeline, the realty industry expects dubbed the year gone as year of key policy decision that favours the real estate sector to a larger extent.

Hailing the union government for supporting both directly and indirectly Deepak Kapoor, President, CREDAI — Western UP Chapter — said, “For any sector or industry, it’s important to nourish direct and indirect support from the government. Through the passage of RERA and GST, we saw a direct government support that will be immensely beneficial for the sector in long-term perspective.” Commenting upon the indirect government support the Director of GulshanHomz said that the Union Budget was very crucial. Announcements such as raising the HRA deduction by Rs 36,000, increasing the ceiling on tax rebate by Rs 3,000 for people earning less than Rs 5 lakh annually, DDT removed from REITs, a total of Rs 97,000 crores announced for the development of minor and major roadways, developers not to attract any taxes on profits arising out of affordable housing developments and many other decisions. These decisions are sure to benefit the sector indirectly and will promote the government’s plan of Housing for All; where private developers have already begun to contribute heavily. Also, we are projecting the upcoming RBI’s policy review and Union Budget to be populist, and this will allow this sector to function more smoothly in 2017.

Calling 2016 as year of key policy decisions that would work as booster dose to the sector in long-term perspective Avneesh Sood, Director, Eros Group said, “The passage of GST and RERA has been one of the biggest highlights of the year that is sure to benefit the sector in the long run. Monitoring and supervision of transactions, clarity of tax structure while buying property and transparency in the sector, were the desires of every buyer that has been finally answered by the passage of these two bills especially. By the end of second and third quarters next year, we will have various states implementing RERA with a regulator on board. Even GST, which has been postponed, will become operational by the end of third quarter next year.”

When we talk about key policy decisions being taken by the government to help the real estate sector, how can we forget demonetization? Speaking on the ‘surgical blow’       on the black money Kushagr Ansal, Director, Ansal Housing said, “Post demonetization, investor’s market in the real estate sector would face short-term halt but demand for good quality development by reputed developers with a strong delivery and finance history is bound to increase,” and added, “With RERA to become operational in most states by next year and effect of demonetization making transactions digital, we will automatically observe a much transparent realty sector in 2017.”

However, when we talk about the effect of these key decision which was aimed at helping the real estate sector to come out of the sluggish growth hangover, performance of the realty sector in 2016 was a mixed bag, where project launches saw a dip by almost 6 percent year-on-year with NCR realty market witnessing the biggest fall; but possessions offered increased drastically by a staggering 15 percent. With the domestic demand not being up to the mark due to prices still being relatively higher, unsold inventory piling up and EMIs not coming down proportionately, developers shifted their focus towards delivery of units and clearing off the remaining stock rather than launching fresh units.

Rakesh Yadav, Chairman, Antriksh India said, “From 2008-12, massive project launch happened across the country, the possession of which was due by this year or the next. This coupled with the sales not performing up to the mark; developers were provoked to focus on the delivery part. With RERA also passed, it was crucial that developers stood up to take the responsibility of delivering on time.” Yadav said that it can be regarded as a boom for the sector, as more possessions mean better performance and stability in the sector which further attracts potential buyers. As the inventories get cleared and possessions take place, sales will pick up pace and we are projecting 2017 to break the three year sales dip jinx.

Standing in sync with Rakesh Yadav of Antriksh India; Dhiraj Jain, Director, Mahagun Group said, “Possession saw a major thrust on account of RERA being passed and delivery becoming the prime motive of every developer. Next year might turn out to be even better for the sector as the upcoming Union Budget is expected to offer major relief for the buyers. Even interest rates might come down to as low as 7 percent that will allow the sales to multiply. With numerous projects across the country reaching into the advanced stages of construction today, possessions will yet again be a highlight for 2017.”

Talking about digitization which is required into the real estate sector to bring transparency into the sector as prime objective in coming year Vikas Bhasin, MD, Saya Group said, “Next year will be the year of implementation and digitization of the realty sector. Post demonetization whole nation is moving towards cashless economy. Hence, realty sector and the government needs plan to digitize the entire mechanism, from furnishing details to sales to payments to registrations. We might even witness government subsidies or benefits if real estate sales and registrations go digital.”