With the new Government at the centre, we have been witnessing series of radical and transformational reforms - Demonetisation, Real Estate Regulator Bill (RERA), FDI relaxations, GST, Benami Transactions (Prohibition) Amendment Act, Change in Accounting standards IFRS - all coming in a row and in quick succession. Obviously, the year 2017 will see the Indian real estate sector to be still more transparent, credible and attractive with only organised players on the ground. With home ownership always being a priority ambition and investment objective for all Indians, these reforms will have very positive implications for the home buyers as well as residential real estate sector.
The transitional slowdown in demand which we witness as an after math of series of reforms has nothing to do with the huge pent-up demand for housing in India. This lull phase is only temporary and will vanish soon. In 2017, the primary sales market especially across larger cities will go up as real estate prices have already bottomed out and stabilised in these cities with no scope or very minimum chance of further coming down. Fence sitters who had deferred their decision expecting further fall in prices have already understood the reality and have started coming back at least in the case of credible and established long term players of good brand value.
It is imminent that with the moves by the Government like demonetization and digital economy the un-organized and the less organized segment of Real estate sector like any other trade and services with high cash economy will be all together wiped out in due course - vacating the place only to the existing and the new reputed developers who have good practices. This will, naturally create a ‘Demand High’ ‘Supply Less’ situation, more particularly in mid-market and affordable housing segment - given less number of players on the ground. Home buyers should realize this aspect and understand that “pricing” is a critical factor in the current market scenario and no player will lose the chance to offer the best possible price in order to secure his business. Therefore, the present time is extremely favourable to home buyers to make their move to secure the best real estate bargains. They should make the hay while sun shines instead of repenting later in terms of price and choice.
Buyers are going to have the best time in 2017. With surplus liquidity and lower cost of funds for the banks, lending rates by commercial banks will come down which is good for the sector. Banks may further relax their margin requirement stipulations for the home loans. Home buyers will find it easy go in for Housing loans. Consequently, demand for housing will go up.
As to office and commercial real estate’s year 2107 holds a bright future. Going by the present trend, good connectivity, existing physical and social infrastructure in the area, availability of campus style office spaces will be determinants for the demand, rents and capital values.
Overall, accelerated by the present measures by the Government Indian Real estate sector will surely witness a healthy growth with growing demand in the year 2017 with organized, reputed, credible players on the ground.
As said, 2017 would be the best time for the home buyers.
- M Murali is the Managing Director of Shriram Properties. Views expressed are personal.