India's real estate market has seen an investment of $1,990 million (approximately Rs 12,766 crore) in the first half of this year, and the residential segment has cornered 54% of it. The inflows have been robust thanks to greater transparency ushered in by various reforms.
Terming the investments as a massive boost to the sector, Anuj Puri, chairman of Anarock Property Consultants which has come out with the report on inflows in real estate, said, “Residential property remained the most preferred asset class in Indian real estate during H1 2017. While overall investments in Indian realty touched $1,990 million in this period, the residential sector accounted 54% ($1075 million) of total investments. In the same period, investments into commercial realty accounted for 40% ($796 million) and retail received 6% ($119 million) of total real estate investments.”
Similar views were shared by Shobhit Agarwal, managing director - capital markets and international director, JLL India.
“As far as investment inflows into Indian real estate are concerned, 2017 seems to have set a new milestone. The total investments are the highest ever seen in any year’s first half. It has not only exceeded the H1 2007 but also H1 2016. Given the scale, 2017 seems set to break all previous investment records,” Agarwal said.
Explaining the factors behind the surge in investments, Puri said that the institutional investors have for long been waiting for greater transparency in the Indian real estate market, which has now arrived with the deployment of Real Estate (Regulation and Development) Act (Rera) and goods and services tax (GST).
Besides, liberalisation of foreign direct investment has also improved the investment community’s sentiment. This measure is expected to attract further private equity from foreign players, opined Agarwal.
Thirdly, non-credible players are in a dock with the consumer-friendly Rera law. As a result, they either have to withdraw from the market or get into a joint venture or joint development or outright sale of the project with strong and well-known players.
According to Puri, all indicators point towards a decisive return of buyer interest over the next 18-24 months. This revival is likely due to a combination of factors such as improved buyer confidence with Rera implementation, new taxation norms and repo rate cut being to 6% by Reserve Bank of India.
Hence, there is a possibility of top-notch developers becoming the preferred lot with the buyers during the upcoming festive season. In order to be Rera compliant, real estate firms had kept new project launches on hold, which will happen just before the festive atmosphere kicks in.
...& ANALYSIS
- The inflows have been robust on account of reforms such as Rera, GST
- Institutional investors had been waiting for greater transparency for long
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Explaining the factors behind the surge in investments, Puri said that the institutional investors have for long been waiting for greater transparency in the Indian real estate market, which has now arrived with the deployment of Real Estate (Regulation and Development) Act (Rera) and goods and services tax (GST).
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