Real Estate trends in the market
Real estate, trends that have come up in the market have the power to reshape the Indian real estate sector in 2018. The year 2018 is going to be a bumper year for the realty market. Few of the policy changes introduced were demonetization, RERA, and REITs in 2016, followed by GST in 2017. There are various other anticipations have been observed by the experts.
There are 6 major trends that have been observed for Indian Real Estate.
Global capital flow into Indian real estate will increase further, as per the World Investment Report 2016-17, India has been ranked fourth for FDI inflows, by the United Nations Conference for trade and development. Improvement in the regulatory framework, has built up an attractive destination for both global and Indian investors. The expectations from private equity is high. Indian real estate has attracted USD 32 billion in private equity so far. Due to transparency, NRIs find country’s real estate market more reliable.
Developers will revamp their business models, earlier in 2016, developers launched lots of projects and there was no guarantee of completion of the projects. Now, through the RERA act, a deadline has been given for the projects to be completed. It will force developers to improve their business model. The developers will require to bring more transparency as well as accountability in their system, and do a lot to increase consumer confidence. Also, the Goods and service tax (GST) as well as the Benami transactions (Prohibition) amendment act 2016, will have a major impact on, how developers run their business. Developers, should bring changes in their business models to sustain in the market.
The REITs will have an important and long-term impact on developers, with the choice of either ‘corporatizing’ or risking taking over, by their larger counterparts. Corporate developers like Tata, Godrej, Mahindra, will acquire more projects.
More of India Inc. moving into ‘hybrid’ spaces are causing a rise in co-working culture, with the co-working culture, all over metro cities the start-ups are being provided flexible working options at affordable prices. Companies with limited space requirement, are leasing out their office space, which is giving rise to ‘hybrid’ space. This would help in employee motivation, boosting productivity and, bringing cost-efficiency.
Affordable Housing Segment, an impact on the housing sector, according to the plans, more than one crore houses are to be built in rural India by 2019, with support to cheaper sources of finance. External commercial borrowings and Re-financing of housing loans by National housing banks, would help in the growth of the sector. Home buyers have been given the criteria for affordable housing, where the carpet area has been changed from 30 square meters to 60 square meters from the saleable area. The land prices would go down in the next few years, as there is limited availability of a high-value currency due to demonetization.
Increase in Industry Consolidation, due to increase in developers, projects and lack of customers, the merger of different developers is being implemented. Joint developments and joint ventures will give more meaning to the real estate sector. This will give rise to mergers between small and big developers, struggling developers with strong players, also landowners with new builders. This will attract the investors as, the price earnings ratio for this sector will improve.
Transformation of Office Sector, as the REIT will be listed, the builders would get funds easily to make buildings. The office sector would get funding from private equity funds. It will attract the small investors, with minimal risk appetite. They will know that, the money they are investing in, is into something that is concrete, and it would not lose its value. The investors would know that their money is in safe hands.
With the growing trends in real estate sector, people are now moving for investment in small scale as well. “Real estate investing, even on a very small scale, remains a tried and tested means of building an individual’s cash flow and wealth”.