In last few years Indian real estate sector has witnessed high growth in recent times with the rise in demand for residential as well as commercial spaces. The Indian government has come up with changes like demonetization, RERA, Benami Transactions and REITs, it seems that 2017 is going to be a year of both Homebuyers and Developers.
\nThus in this backdrop, here are major 5 trends that defined Indian real estate in 2017 and are most likely to shape the sector in the coming year.<\/p>\n
1. Global capital flow into Indian real estate will increase further
\nAs per the World Investment Report, 2016 by the United Nations Conference on Trade and Development India ranked fourth in developing Asia for FDI inflows
\nIndia\u2019s tier I cities moved up to the 36th rank in JLL\u2019s 2016 bi-annual Global Real Estate Transparency Index.These factors were improvements in structural reforms and the more liberalized foreign direct investment (FDI) regime. Increased transparency brings higher investments into such real estate markets. Thanks to changes in its regulatory framework, India is now way more attractive to both global and Indian investors.
\nIncreased consolidation and transparency \u2013 and the launch of REITs (Real Estate Investment Trusts) this year \u2013 will further whether their appetites for getting a piece of the Indian real estate pie.<\/p>\n
2. Developers will revamp their business models
\nFirstly, Estate Regulation & Development Act (RERA) will bring unprecedented transparency and accountability requirements for developers into the system, and do a lot to increase consumer confidence. Consumer participation will increase in distressed ongoing projects.
\nAlso, The Goods and Services Tax (GST) and the Benami Property Act will also have a major impact on how developers run their businesses. Now developers have realized it is time now to revamp their existing business models if they want to remain in business at all.
\nMarket watchers who had despaired of the Indian real estate market ever shedding its tainted image have every reason to perk up now. Currently, the residential property market is dominated by developers \u2013 Genuine investors are making a beeline out of real estate as an investment category.<\/p>\n
3. The sun rises on affordable housing
\nThe real estate sector is likely to get lots of benefits from affordable housing and will make homes cheaper and spacious.Under affordable housing, the carpet area of 30-60 square meters will now be applicable as against built-up area of 30-60 square meters\u2013 an area increase of 20 per cent
\nAs per to Finance Minister about 1 crore homes to be built by 2019 for the homeless and those living in kutcha houses.
\nWith the Re-financing of housing loans by National Housing Banks (NHBs) can also give a further boost to the sector. The Government\u2019s dream of Housing for All by 2022 appears a lot more attainable now.<\/p>\n
4. Office sector transformation
\nAs per to the scenario, the first REIT listing is expected within the next few months, and prominent private equity funds such as Blackstone will likely be the first movers.
\nREITs will attract smaller investors alike because of their inherent nature to provide regular dividends at relatively low risk. Smaller investors are especially happy with RIET and easier investment opportunity because Indian REITs will prefer to invest in commercial space developments \u2013 specifically the highest quality or Grade-A properties \u2013 because of the higher rental yields in this asset class; and Only 20% of an Indian REIT\u2019s monies can be invested in development, which is the riskiest aspect.
\nThe remaining 80% of a REIT\u2019s assets must be invested in income-producing property. The REIT potential in India is huge, with around 229 million sqft of office space currently being REIT-compliant. Even if 50% of this space is listed in the next few years, we are looking at a total REIT listing worth USD 18.5 billion. Moreover, India\u2019s stock of Grade A commercial asset is increasing, with REITs acting as a sure-fire growth catalyst.<\/p>\n
5. More industry consolidation
\nWith the slowing sales and lack of financial prudence among some small developers is leading to a consolidation. Consolidation will make overcrowded real estate lean and mean. With consolidation happening by ways of joint developments and joint ventures between landowners and\/or small developers with bigger, better-organized players, smaller developers being bought out by larger players, and struggling developers cashing in their land banks by selling them to players with stronger balance sheets and appetite for growth.<\/p>\n","protected":false},"excerpt":{"rendered":"
In last few years Indian real estate sector has witnessed high growth in recent times with the rise in demand for residential as well as commercial spaces. The Indian government has come up with changes like demonetization, RERA, Benami Transactions and REITs, it seems that 2017 is going to be a year of both Homebuyers…<\/p>\n","protected":false},"author":1,"featured_media":911,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/atnda.com\/index.php?rest_route=\/wp\/v2\/posts\/119"}],"collection":[{"href":"https:\/\/atnda.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/atnda.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/atnda.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/atnda.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=119"}],"version-history":[{"count":3,"href":"https:\/\/atnda.com\/index.php?rest_route=\/wp\/v2\/posts\/119\/revisions"}],"predecessor-version":[{"id":962,"href":"https:\/\/atnda.com\/index.php?rest_route=\/wp\/v2\/posts\/119\/revisions\/962"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/atnda.com\/index.php?rest_route=\/wp\/v2\/media\/911"}],"wp:attachment":[{"href":"https:\/\/atnda.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=119"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/atnda.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=119"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/atnda.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=119"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}