REAL ESTATE HOPES FOR FASTER REVIVAL

Even though there are challenges galore for the real estate industry. However, there is light at the end of tunnel in Modi Government’s second term. After general elections 2019 and BJP’s humongous victory, it

BY Realty Plus
Published - Jul 20, 2019 4:51 AM

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Even though there are challenges galore for the real estate industry. However, there is light at the end of tunnel in Modi Government’s second term.

After general elections 2019 and BJP’s humongous victory, it’s time to look at the bigger picture – Growth of all sectors in tandem. The NDA government has 17.5 million homes under PMAY in housing for all – a grand mission by 2022. Though home buyers continue to scout properties within their budgets. Amit Wadhwani, Co-Founder, Sai Estate Consultants Chembur Pvt. Ltd pointed out, "Most developers today are not investing in TDR, fungible FSI and land premiums. Financiers are also lending only on developer’s capacity to execute projects, while the municipal corporation is very proactive and permissions are acquired within 3-4 months.Within 6 months there’s access to online permission which is one of the best things Gujarat upholds.”

Ashish Shah, Chairman & Managing Director, Shree Balaji Group, added, “The prime interest drivers for developers continue to be Gujarat’s admirably progressive stance towards infrastructure and investment flow enablement, and its pro-people orientation to real estate growth.” Corraborating the positive sentiment, Dushyant Goswami, Managing Director, Suvidha Projects added, “Gujarat developers are well organised in comparison to other cities. Post demonetisation, Ahmedabad realty picked up extremely well. You still have to give the government at least a couple of more years and to the consumers to adapt to GST and RERA complications.”

CHANGING REALTY PATTERNS

New trends are emerging in the sector post demonetization, RERA and GST. While, real estate professionals are getting more organized, the sector overall is also transforming including the consumers of the products. Sameer Sinha, Managing Director, Savvy Infrastructures Pvt. Ltd expressed, “Real estate has always been a consumer-driven market. But, the whole attitude today has changed. We now believe that real estate should be considered a service industry and not a manufacturing industry. More so, as online portals have made it easier to connect all the stakeholders These web portals are working with local people and offering - ‘touch’ and ‘feel’ experience to the buyers.”

Emphasizing on the changing relationship between developers and homebuyers, Ranjeev Mahindru, CEO Adani Realty said, “Personal connect and credibility have become critical factors in property sales. Developers are now creating the product after studying the market and considering consumer response and reaction, and thereafter intelligently pricing the product for achieving sales.” Jayesh Kariya, Real Estate Expert, Consultant & Chartered Accountant, BSR Affiliates agreed, “Developers are focusing more on consumers’ concern especially the organized players. The buyers trend too has changed, drifting towards affordable and studio apartments.”

Anand Choksi, Managing Director, The Real Estate Connect explaining the next gen approach stated, “The new generation of develelopers are putting a lot of time into research and invite the consultants before floating the project. Young consumers also want to deal 100% in cheque. Right now the cash is generated only because of 20% capital gain tax. The Modi government till now had carrot and stick approach towards real estate which has helped in making the sector transparent. Going forward, incentives from the government will help faster recovery of the realty sector.”

In 2019, experts believe that urbanisation and economic growth, as well as increasing incomes, will drive the demand for residential and commercial properties. The NDA government has come to power with absolute majority – it has raised optimism. This is boosting sales and is also helping with positive sentiments. Even the new launches (projects) are picking pace. Going forward, the government would need to resolve issues of ambiguities in taxation, liquidity & funding crunch, uniform RERA implementation across the country and helping the sector in completion of stalled projects.

TOUGH ROAD AHEAD

While the government has taken the right steps to set the Indian real estate’s house in order, much more needs to be done. The massive unsold stock across cities and unaffordable property prices remain the main challenges for the sector.

Yogesh Bhavsar, Chairman, Vyapti Vandematram Group sharing the industry concerns said, “Government needs to focus on eliminating the loopholes. The GST rates have been reduced to 1% and 5% on affordable and underconstruction houses respectively, GST on cement at 28% too should be lowered too. In addition, the denial of ITC destroys the basic structure of GST that allows those who add value to claim credit for all the taxes paid on inputs across the value chain to make production transparent and efficient as well as create audit trails to curb evasion. Clearly, costs will come down only when builders are allowed to claim ITC. The agenda for the new government should be to put in place more evolved regulatory mechanisms that are indicative of market maturity. A single window mechanism should be put in place so that all approvals are received on time which can lead to increment of more investments.”

Amit Wadhwani added, “The government’s second term in power has created stability. Real estate industry needs perception management and the real estate bodies can work towards positive image building.” He added, “Consumers want quality product that are affordable and developers will have to work towards bringing down the prices. The role of government incentives in this direction becomes critical.”

Ranjeev Mahindru elaborating on the pricing aspect expressed, “As a business community, we need to be cognizant about how to control cost. If the margins are fair, the prices should be fair. The land prices need to be stabilized or else the project costs will remain high. Also, the high cost of raw materials adds to the project pricing and therefore the government needs to relook at the taxaton on building materials.”

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Tags : Realty+ Connect Amit Wadhwani Jayesh Kariya Ashish Shah Modi Government Modi Government’s second term Shree Balaji Group Dushyant Goswami Suvidha Projects Sameer Sinha Savvy Infrastructures Pvt. Ltd Ranjeev Mahindru Adani Realty BSR Affiliates Anand Choksi The Real Estate Connect Yogesh Bhavsar Vyapti Vandematram Group