Implementation of demonetization, Goods and Service Tax (GST) and Real Estate Regulation Act (RERA) in Samvat 2073 changed the way realty sector performed in the country. Their combined impact will be felt for decades together, the realtors feel. The initiatives caused a severe slowdown, estimating around 70 percent. Realtors expect a couple of game-changing initiatives in Samvat 2074 and expect that new year will bring a fresh lease of life in the sector.
"These were the most defining reforms disrupting the sector. Even after facing three-pronged attack (demonetization, GST, RERA), the sector is resilient," said Jaxay Shah, president of Confederation of Real Estate Developers of India (CREDAI).
Vijay Shah, former President of Gujarat Institute of Civil Engineers and Architects, said that while shops, offices and affordable housing in Ahmedabad witnessed demand, other sectors did not find many takers. "The sales were down by about 70%. Land transactions, land auctions have come to a grinding halt," said Vijay Shah. A recent auction of land by Ahmedabad Education Society (AES) witnessed only four participants for two parcels of land. Each parcel had only one participant as remaining two did not bid. Earlier, the similar auction had 25-30 participants.
While admiring the initiatives taken by the government, Jaxay said that Éase of Doing Business' is a far cry for the sector, without which the vision of providing a home to everyone by 2022 will remain a pipe dream. "While there are sweeteners for the buyers, a project has to pass through 140 tables and 40 permissions, even though there is a dedicated sectoral regulator. Who will provide the houses to the buyers? Government sweeteners constitute only 8-10% of the cost," said Jaxay Shah. The sector has least per capita investment for every job created across sectors supports about 300 industries and five crore families.
The number is likely to double in 10 years. However, the sector also got status of infrastructure. With interest rates falling and bank lending to buyers on a rise, realtors feel that their effects are likely to be visible next year. Vijay Shah feels that the central government have more in store for the sector, which could define how the sector would perform in one or two decades.
A move is expected to regulate unutilised land. The government could charge annual taxes. This will force land hoarders to liquidate their assets, which could trigger a fall in prices of land and cheap land could then be used for projects. The government will also brutally execute legal provisions related to prevention of benami properties during the year.
Realtors expect that the new Samvat will bring respite and accelerate the business.
How is the market
Benchmark Sensex gained 4,707.74 points, giving 16.88% returns in Samvat 2073
NSE Nifty gained 1,584.60 points, giving 18.37% returns
Per month SIP rose from Rs 3,122 crore in October 2016 to Rs 4,335 crore in September 2017
Total SIP investments in past 12 months stands at Rs 43,921 crore
SIP investments in April-September 2017 stands at Rs 29,266 crore
between Sept-14 and Sept-17 bank deposits grew 31.82%, MF investments grew 118.32%
Mutual funds were net buyers in both equity and sales in past 12 months
Except for March 2017, DIIs have invested more than pulling money out
Mutual funds had positive investments in all the past 12 months
FIIs have been net sellers in equity in 7 months since October 2016
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