The year 2017 was an action-packed year for Indian real estate. While demonetisation and GST slowed down the residential real estate sector across the country, the National Capital Region (NCR), particularly, saw a glut. Builders who couldn't complete projects were in abundance. Consequently, buyer's trust in them ebbed.
The year 2018 promises to be different, at least in some geographies. The introduction of Real Estate Regulation and Development Act (RERA), which makes it mandatory for builders to register a property with the regulatory authority before marketing it, is expected to boost buyer's confidence. It is bad news for small builders in the unorganised sector. The big is expected to gain marketshare as the small vacate the market. Prices, going ahead, will therefore firm up.
There is data that underlines these points. Quikr Homes recently conducted a survey among 300 builders in seven cities to capture their expectations. The responses point to a revival of the market over the next six months.
1. About 64 per cent of the respondents believed that Bangalore, Pune and Hyderabad will be the top three cities where real estate sales would grow the fastest; 36 per cent felt that Mumbai, Delhi NCR, Kolkata and Chennai will be amongst the top cities in sales growth.
2. In terms of pricing, Bangalore may appreciate the fastest; 25 per cent of builders expected projects in the city to appreciate on the basis of cost per sq.ft, followed by Hyderabad and Pune.
3. The survey highlighted that 72 per cent builders from Bangalore are planning to launch new projects over the next six months. Similarly, Pune and Hyderabad have shown positive growth with 70 per cent builders stating their intent. However, there is a decline in the upcoming launches from builders in Delhi NCR and Mumbai MMR.
4. Affordable housing could emerge as the defining trend in 2018. The survey indicated that 45 per cent of the respondents were planning to launch affordable housing projects while 34 per cent still preferred the mid-segment.
5. An overwhelming 82 per cent of the builders believed that RERA will bring in the much needed transparency in property dealings; 18 per cent were the sceptics. It might end up adding another layer of bureaucracy, they felt. The regulation, however, is good news for investments. About 42 per cent felt that RERA could bring in a significant increase in Foreign Direct Investments because of transparency and organisational set-up.
6. Builders, however, were divided on the impact of GST. Some 41 per cent said that GST has not simplified their business operations while another 38 per cent said they weren't sure about how the tax reforms would play out in the long run.