Santosh Sinha / RealtyMyths
Real estate is a serious business; it involves one’s lifetime investments and savings. Millions of customers look out for their abode every year; thousands of developers lure them of their dream homes. This demand and supply matrix produces millions of jobs for both skilled and unskilled sect of the society. More than 250 allied sectors find their businesses amidst these transactions. No doubt, Indian real estate is one of the largest contributors to country’s GDP. From the current rate of 6-7%, the sector has potential to enhance its contribution to almost 15% by the year 2020. However, sector’s growth has stagnated in last few years. This has made the developers, even more, serious about their future.
Amidst all the seriousness, real estate sector witnessed some overwhelming developments this year. Be it the draft for ‘100 Smart Cities’ or the roadmap for ‘Housing for All by 2022’, the sector saw some respite from slowdown and sensed some cheer in the second half. Announcements related to FDI in Construction and Real estate Regulatory Authority also added spice to market sentiments. Developers too, feel rejuvenated with these moves and expect a better future ahead. Let’s learn from some of the luminaries of the sector what they have to say on the way forward in the New Year 2016.
Vineet Relia, Managing Director, SARE Homes describes these developments as crucial structural reforms. “These initiatives would not only benefit the economy at large but would also create a sector-wise positive ripple effect. The government’s initiative to review the Real Estate Bill, notwithstanding reservations by various parties, if implemented, would give way to a crucial structural reform of single-window clearance for the sector. Going forward, while the RBI has cut rates by 125 basis points, the transmission of these lower rates to consumers would be on the expectation list of developers and buyers alike. The Smart Cities mission is going to be a future growth centre for the sector and we hope that the Government seed funding can leverage further investment”.
However, another section of the developers thinks there is much to be done to bring the sector back on track. Dr. Anil Kumar Sharma, CMD, Amrapali Group says, “The current market scenario was stagnant and there is an issue of liquidity and cash flow for the developers. As per real estate data research firms, new launches declined by 30-35% as developers face the financial crunch and business was on the lighter side throughout the year. Meanwhile, RBI cut-rate twice in a year, it did not contribute more as expected to increase the purchasing power of the willing buyers. So, real estate sector still expecting more boost-up from the financial institutions, government authorities and concerned department for the survival of real estate sector and also contributing in the growth of GDP as real estate is the major source to revive the growth of Indian economy.”
There has been much hue and cry for implementation of Single Window Clarence as it is expected to bring more transparency into the sector. Raising the concern Kishore Bhatija, Managing Director, K Raheja Corp said, “Industry has been campaigning for simplifying clearances with a single-window system and we hope to see some traction on this front in the coming year. The implementation of time-bound clearances will help in reducing the red-tape to a large extent”. The issue of duplicity in taxation also remained an unattended matter. Generally, developers end up paying three different taxes for the same product first in the form of an excise tax, then the service tax and finally the corporate tax. He further said, “With respect to taxation, the much awaited and debated GST will bring in a new era of uniform taxation. We are hopeful that it will eliminate the current multiple tax structure, which does not serve the interest of developers and home-buyers in any way. The easing of FDI norms will help attract much-needed funds into the sector. The industry will be better equipped for quicker project completion, resulting in lower cost, eventually lowering cost in the hands of the consumers”.
One of the most talked about developments in this year remained clarence of the Real Estate Regulatory Bill which marked the way for the formation of Real Estate Regulatory Authority (RERA). The Authority would look after the day to day issues and would check fraudulent activities by developers and the dealers. Manju Yagnik, Vice Chairperson, Nahar Group feels that formation of Regulatory Authority would weed out fly-by-night operators from the sector. She said, “The State Regulator if approved will be the first one in the country. This is a positive development and could lead towards finally getting industry status for the sector. The RERA will help in weeding out fly-by-night operators who give a bad name to the industry and bring more transparency. Also, this will result in well-established players getting a wider platform to operate, with more clarity and possibly single window permission being made available as the regulator would require the completion of the project in given time frame. Banks and Financial institutions will also not hesitate in advancing loans to the industry”. She also shared her views on the Mumbai Development Plan 2034 announced by the government and said, “When passed, it could well be a game changer for the Mumbai real estate market. The city is in dire need for a realistic development plan. This plan will be a roadmap for the city’s growth and development till 2034”.
Real estate market in the year 2015 saw many facets of the trade and stood strong on a hope to welcome brighter sunny days in the year 2016. It bore the mounting pressure of unsold inventories, the absence of buyers from the market and an ever-pinching pain of fund crunch. Yet, developers feel the year 2016 would bring in much-awaited cheer to the sector and the economy as a whole. Rightly summing up the events, S.K Sayal, Managing Director & CEO, Bharti Land Limited said, “On the flip side, inventory levels built up as sales continued to stagnate in the first three-quarters. Despite some pain points, inflation is under control and the realty scenario is slowly turning around. Meanwhile, the commercial segment performed relatively better than residential. Yet, attesting to the allure of the residential space, most investments happened here, with commercial attracting less than one-fifth of PE inflows. As sentiment slowly turns positive, 2016 is likely to see better demand for commercial and residential units. Come 2016, the realty sector may witness its long-awaited recovery as fence-sitting home-seekers finally take the plunge to purchase their dream homes”.
The legendary Heath Ledger in the movie ‘The Dark Knight’ has asked Why So Serious? The year 2016 put forward the same question to all the stakeholders, “Why so serious, brighter days are coming ahead”.