The trends will shape or maybe reshape Indian realty sector in 2017

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The trends will shape or maybe reshape Indian
realty sector in 2017 January 1,2018 Real
Estate property blog, property trends in
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real estate property blog, real estate property
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in Indian real estate in 2017 m Favista Admin
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Global capital flow into the Indian realty will
increase further India is ranked 4th in
developing Asia for FDI inflows as per World
Investment Report 2016 by United Nations
Conference for Development and Trade. That is the
endorsement at highest levels, as well as the
real estate, saw equity investment on the visible
return journey to India previous year. The Indian
realty market has attracted over 32 billion on
the private equity so far. The universal capital
flow into the Indian realty in 2016 stood at
somewhat 5.7 billion. The holistic high of 2007
especially in terms of the complete PE inflows
which was not breached, the previous year proved
to be the 2nd best till now. Despite the Brexit
as well as uncertainty around the US President's
outsourcing as well as visa-related policies and
the private activity on equity looks healthier in
2017- thanks to the strengthening as well as
modernizing the economy and growing reputation of
the country as an attractive destination for
investment. The tier-1 cities of India moved up
to 36th rank in the JLL's 216 bi-annual Index of
Global Real Estate Transparency. The catalyzing
factors for these were improvements in the
structural reforms as well as the more
liberalized FDI i.e., foreign direct investment
regime. The increased transparency brings higher
investments into the real estate markets. Special
thanks to changes in the regulatory framework,
India is way more attractive now to both the
Indian and global investors. The increased
transparency and consolidation and launch of
REITs i.e., Real Estate Investment Trusts this
year which will further whet the appetites for
getting the price of Indian realty
pie. Developers will revamp the business models
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Throughout the year, a number of new housing
project launches were much lower than the units
that were sold. Will the states staring at
approaching the deadline to appliance their
versions of Real Estate Regulation and
Development Act (RERA) as most of these will
certainly fall in a particular line? The landmark
law will certainly enforce the hitherto
extraordinary accountability and transparency
needs of the developers into the system and do
more to increase the consumer confidence.
Customer activism has been making the news in
present times which will increase in the
distressed ongoing projects. Also, it is not RERA
that Indian realty sector anticipates with the
bated breath. Goods and Services Tax and the
Benami Property Act will have a prime impact on
how the developers run their businesses.
Demonetization definitely shook up the previous
ways of working but didnt affect the
self-governing developers with correct products
targeted at working masses. The remaining has
realized that it is the time to revamp the
existing business models if they want to continue
in the business at all. The market watchers had
despaired of Indian realty market ever shedding
the tainted image has all the reason to perk up
now. Presently, the housing property market is
dominated by the end-users or the speculative
investors those are making the beeline out of the
real estate investment category. Housing demand
is certainly expected to pick up but the recovery
will be somewhat sustainable and based on the
sounder market fundamentals than the transient
sentiment. The commercial space will get stronger
shot in the arm with REITs. Real estate
Investment Trust will certainly have an important
as well as long-term impact on the builders and
present these with choice of either the
corporatizing or the risking take-over by better
and bigger-organized counterparts. The pressures
from the funding agencies will certainly be
stronger to ignore. The corporate developers such
as Godrej, Tata, Mahindra, Bharti, etc., will
actually acquire many more projects and the
corporate homes such as Birla are gearing up
their maiden innings in the realty development.
The institutional funding will increase. Co-workin
g- more of India Inc. will move into the hybrid
space The co-working spaces are actually popping
up across the Indian metros and the tier-2 cities
while providing the start-ups with the elastic
working options at the affordable rentals. There
were over 100 operators in this particular space
across India though there is still a limited
supply of co-working spaces that are available.
This segment, however, is slow but certainly
moving into the boom mode across the country
provided that the advantage such spaces offer is
cost efficiency, boosted productivity, employee
retention and motivation, perfect option for the
organization who need client servicing teams
which are close to the respective site location
of client with low-office vacancy and
organizations focused on the agility who home
their innovation teams in the co-working spaces
which can induce the quicker leanings to curve to
integrate these into the entrepreneurial
eco-system. Co-working operators certainly prefer
leasing-out parts of or complete areas of the
coworking office spaces with anchor tenant
corporates. In other words, the co-working
operators, as well as corporates, will move into
the hybrid sort of increasingly and spaces rely
on each other. Sunrises on affordable housing The
affordable homes in India are at last set to get
the much-coveted infrastructure status. 1 Cr
homes are to be built in the rural areas by 2019
and this vigorous segment will see cheaper
sources of finances which include external
commercial borrowings. Refinancing of a home loan
by the National Housing Banks can provide the
further boost the sector. New Credit Linked
Subsidy Scheme for the mid-income group with the
provision of Rs 1000 Cr in 2017-18 was proclaimed
even before the budget. Extension of the tenure
of loans under Credit Linked Subsidy Scheme of
Pradhan Mantri Awas Yojana which was increased
from 15-20 years and also the budget increased
the allocation to the Pradhan
3
Mantri Awas Yojana from Rs 15000 Cr to Rs 23000
Cr in rural areas. The criteria for qualifying
for the affordable residences were revised to 30
square meters and 60 square meter on the carpet
rather than the saleable areas in 4 prime metros
and non-metros respectively. This successfully
increases the size of the affordable residential
market across the country. Furthermore,
demonetization of higher-value currency notes
will cause the land rates to ease in next some
years- especially in the far-flung areas around
Indian metros, tier-2 and tier-3 cities. The
dream of the government of Housing for All by
2022 comes a lot more attainable now. Office
sector transformation- from REIT to complete The
first REIT listing is actually expected within
next few months as well as the prominent private
equity funds like Blackstone will be the prime
movers. REITs will certainly attract the
institutional and the smaller investors as of
their inherent nature to have regular dividends
at the relatively lower risk. Smaller investors
especially the excited at his easier and new
investment opportunity because Only 20 of
the Indian REITs monies can be invested in the
development which is, of course, the riskiest
aspect. The enduring 80 of REITs assets which
must be invested in the income-producing
property Indian REITs will expect to invest
in the commercial space developments-precisely
the highest quality or the A-Grade properties as
of the highest rental yields in the asset
class REIT potential in India is bigger with over
299 million square feet of the office space
presently being REIT-compliant. Even if 50
percent of the space is listed in few years, we
certainly are looking at complete REIT listing
worth 18.5 billion. Furthermore, the stock of A
Grade commercial assets of India is increasing
with REITs acting as a similar-fire growth
catalyst. More industry consolidation on
cards Slower sales and lack of the financial
prudence along with various developers is leading
to fairly obvious consolidation- conclusion. The
overcrowded realty sector is going to become much
more leaner and meaner with the consolidation
happening by the ways of joint ventures and joint
developments between the landowners or/and small
developers with better-organized players, bigger,
smaller developers bought-out by huge players as
well as the besieged developers cashing by
selling the players with the tougher balance
sheets as well as appetite for growth. The speed
at which all this happened will depend on how
much equity gets infused into the real estate
sector by huge PE investors and the strategy that
domestic and foreign developers adopt. Some of
the foreign developers have entered India,
setting up the base as well as playing for
keeps. Some of the investors, as well as the
developers, will take the ultimate pledge into
the realty market now while many others will
prefer to ride the fence for some time but one
way or the other, merging will be the name for
Indian realty industry over the next 5 years.
Bigger players will peak in the strength b over
2021 and the smaller players will be worn. Of
course, the equity investment or lack of it will
play the deciding role.
About Favista Admin Sanjit is working with
Favista real estate since last 2 years as digital
marketing manager. View all posts by Favista
Admin
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