FIVE WAYS TO INVEST IN REALI ESTATE

AFTER YEARS OF SLOWDOWN, INVESTORS ARE BACK WITHABANG. HERE'S A GUIDE ON GAINING FROM THE REAL ESTATE BOOM.

- RASHMI PRATAP

THE REAL ESTATE sector was severely hit by the demonetisation of ₹500 and ₹1,000 bank notes on November 8, 2016. As everyone from developers to buyers was used to cash transactions, at least partially, this reduced the cash in circulation as well as the number of transactions. Developers lost revenue and many projects had to be terminated due to cash crunch.

A couple of months later, another big change came. The Real Estate (Regulation and Development) Act (RERA) in April 2017 made it mandatory for developers to register their projects with the Real Estate Regulatory Authority and get the required approvals before launching projects. Increased compliance costs, penalties and delayed launches compounded the problems of the sector.

But there was more to come. The Insolvency and Bankruptcy (Second Amendment) Act of 2018 brought buyers within the definition of financial creditors, opening floodgates of petitions even in case of minor delays in project completion. Between June 2018 and November 2019, homebuyers filed more than 1,800 cases; the courts held that any delay would amount to default under the IBC even if the insolvency process had been initiated by a single buyer. Then, in 2020, Covid became the last straw on the camel’s back. Residential and commercial projects got stalled as revenue streams dried up. KPMG estimates that Covid-19 inflicted a loss of ₹1 lakh crore on the real estate sector in FY21.