Policy Changes Propel Realty's Changes

Aspate of construction activities, backed by the governments push for affordable housing and infrastructuregrowth, is indicating the revival of Indias real estate sector. The sector is witnessing high growth with the rise in demand for office, as well as, residential spaces. The market size of the Indian real estate sector is expected to reach $180 billion by 2020 with the housing sector's contribution doubling to 11.2% of the GDP.

- Tushar K. Mahanti

Policy push

The country’s real estate industry is in the midst of a major transformation. Home buyers and home developers are looking forward to a great year in 2018. The previous year was a rollercoaster for the sector with too many things happening. The effect of demonetisation was still visible in 2017. The Union Budget 2017-18 introduced the “Housing for All by 2022”policy, which came with a number of benefits like availability of prime land parcels, access to funds, and fast approvals for incentivising affordable housing projects.

The government later introduced the Real Estate Regulatory Act (RERA) to bring transparency between buyers and sellers. This Act raised the interests of home buyers and confidence among the consumers. Mandatory registration, strong penalties, and complete transparency are some of the key features of RERA. The introduction of the Goods and Services Tax (GST) aimed at dismantling the multiple tax system, has helped to improve the sentiment of foreign investors.

A Credit Linked Subsidy Scheme (CLSS) for the mid-income group with a provision of 1,000 crore in 2017-18 was announced even before Budget 2017-18. Extension of tenure of loans under the CLSS of Pradhan Mantri Awas Yojana (PMAY) was increased from 15 to 20 years, and the Budget also increased allocation to PMAY from 15,000 crore to 23,000 crore in the rural areas.

Backed by these policy changes, 2018 has begun with a lot of promises. The introduction of Real Estate Investment Trust (REIT) and the possibility of receiving Private Equity (PE) investment have eased out the financial needs of the sector. Private equity investments in Indian real estate increased 15% year-on-year in January-March 2018 to 16,530 crore. Private equity investments in real estate are estimated to grow to $100 billion by 2026 with tier-1 and tier-2 cities being the prime beneficiaries.