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INVESTORS & HOME BUYERS GAIN FROM THE RERA-GST IMPACT

Realty experts are of the opinion that property investors and home buyers should invest in properties now for long-term gains. A big change is imminent, which will make the real estate market in India more logical, transparent and stable. Sales could be improving drastically in the next six to 12 months due to a rapidly modernizing business base, high yields, advancement in reforms, and strong economic drivers. 

INDIAN REAL ESTATE STRIKES BACK!

REALTY MARKET TO GROW YOUR WEALTH

The realty market is fast returning to its initial position as a wealth-maker for investors, who can benefit from the historically low EMIs and grow their wealth through real estate. It will be smart to spot the potential now and invest, in order to reap benefits in future. Real Estate Regulatory Authority (RERA) and Goods & Services Tax (GST) have boosted sentiments and enhanced the appeal of real estate as an asset class. The concept of a single tax rate has ushered in a wave of transparency across the nation. There is an overall positivity surrounding real estate.

THE RETURN OF THE HOMEBUYER

Across multiple locations and buyer segments, the country is witnessing the return of the homebuyer. Under the new paradigm, brought in by the recent regulatory regime, even fence-sitters are converting into actual buyers. This paradigm change started with demonetisation in 2016, resulting in a domino effect, which was sustained by implementation of RERA and GST. All these did slowdown real estate sales as the sector started adapting itself to the slew of reforms. However, things have returned to normal and the sector has been reborn.

FACTORS MAKING REALTY INVESTMENTS ATTRACTIVE

In such a scenario, one can only expect positive growth in the property market as there is no scope of prices reducing further. Investments are coming thick and fine. People are looking at the realty sector as a secure and stable investment option than equities, which are facing volatility at present. This means more gains for the real estate sector. Home loans are now easily available. The interest rates on home loans are also low. Bank recapitalisation has ensured easy availability of funds for home loans. Due to the surplus stock in the realty market, buyers now have a wide array of choices and some incredibly good bargains.

“WAIT TO INVEST” OR “INVEST AND WAIT”?

The current scenario is conducive for all property investors and home buyers. Whether one is buying property for personal use or as an investment option, one should not wait any longer. In fact, it is better to buy property now and wait. Returns will definitely flow in. Indians have traditionally believed in investing in gold, equities and properties. Due to the global share market scenario, most investments exiting the equity market, will likely end up in the properties market. This, combined with the Long-Term Capital Gains (LTCG) tax at 10% will attract investors to real estate.

THE BANGALORE PERSPECTIVE

TRENDS IN BANGALORE REAL ESTATE

Experts have witnessed a few favorable trends post RERA & GST implementation that have become evident in the Bangalore realty market. They can be classified as –

• Consolidation of market share in favor of large, reputed and organised developers;
• Increase in informed property purchases and decrease in speculative purchases;
• Stable demand in the mid-income and affordable categories, especially for end-use-driven projects;
• Increased participation of home buyers for living purposes and decreased participation of investors due to less-than-expected capital appreciation;
• A more cautious and rigorous approach towards new property launches, which has been beneficial for reputed developers; and
• Strong demand preference for completed projects in premium category because of indirect tax savings

THE SUCCESS & IMPACT OF RERA

From the start of 2018, the Bangalore residential market entered into a consolidation phase after the structural reforms in 2017. The market in the city absorbed the effects of these reforms amidst a disruption in the market. There was a time when sale of residential units slowed down despite an immense potential for demand, made possible by a massive absorption of commercial office space. This is when RERA stepped in, leading to a correction in inventory, recovery of buyer sentiments, and consolidation of an otherwise fragmented and patchy realty market.

Until now, RERA Karnataka has processed over 2,000 project registration applications. More than 70% of these approved projects are located in Bangalore. RERA has been well-received by both home buyers and developers alike. According to Deccan Herald, there was an initial rush for project registrations, though at present, the authority is approving around 15-20 projects in recent months. Going forward, new project launches would be restricted, as developers will take a more measured approach, in a bid to sell off remaining stock. Demand for properties in the premium segment is expected to remain high.

The consolidation trend will continue and its effects are already visible. Organised and known developers in Bangalore have demonstrated a growth in sales volume despite a lull in the overall realty market after reforms. Another big boost that’s coming is the foray of organised builders in the affordable housing segment to take advantage of numerous tax benefits. This will also help these builders strengthen their market position. The Government has already announced a number of incentives for developers to usher in more supply to the affordable housing segment from organised players.