Rental Reforms Redefine The Indian Real Estate Sector

High time to fully explore and unbox its massive potential

Anuj Puri, Chairman – Anarock Property Consultants

Several breakthrough reforms with pertinence to the Indian real estate sector saw the light of the day over the last one year.

Be it demonetization – the Government’s ‘surgical strike’ against black money – the revolutionary RERA or the unified tax regime of GST – all bore the power of rendering the Indian real estate sector more transparent and professional.

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Residential Realty Poised For Revival In Festive Season 2017

Anuj Puri, Chairman – Anarock Property Consultants

Every year, the end of August ushers in the beginning of festive season in India.

Religious sentiments lead innumerable Indians to plan important purchases and investments – including real estate – during this period.

Naturally, developers also plan for these months well ahead of their arrival with a view to cash in on this positive sentiment.

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Affordable Housing Steals The Show In 2017

Anuj Puri, Chairman – Anarock Property Consultants

After recognizing a massive gap of housing in India, the Union government had announced ‘Housing for All’ by 2022 in July 2015 to achieve the staggering target of bridging a gap of more 1.9 crore houses. 96% out of these are required for the Lower Income Groups (LIG) and Economically Weaker Sections (EWS) groups.

In India, while the population is growing at more than 2.1% every year and may touch 1.51 billion by 2030, growth in housing has been unable to keep the same pace. The Central and States governments are now contemplating many ways and means to provide access to housing for all.

Affordable housing will not only fill the housing gap but be the next major economic growth driver by creating more than 2 million jobs during the period till 2022. To fill the massive gap of affordable housing in India, the government has come up with a spate of many initiatives:

  • To encourage the PPP (Public Private Partnerships) module which can amplify affordable housing, the Union Budget 2016-17 announced that developers would be exempt from paying tax on profits in this segment for five years starting 2016
  • The Government has increased the time limit to complete affordable housing projects from 3 to 5 years. Now, developers will have more time to complete affordable projects
  • The Central Government has raised the budget allocation under Pradhan Mantri Awaas Yojana from INR 15,000 crore in 2016-17 to INR 23,000 crore in 2017-18
  • The National Housing Bank, which is a subsidiary of RBI, has announced that it will refinance individual housing loans worth INR 20,000 crore in 2017-18
  • Affordable housing was given the vital infrastructure status in the union Budget 2017-18. Now, developers will have diverse and cheaper sources of funding, including External Commercial Borrowings (ECBs)

Financial Support and Subsidies

To promote affordable housing, the Government has announced several financial schemes to make housing loans in this segment cheaper:

  • A 6.5% subsidy on interest on housing loans up to INR 6 lakh can be availed for 15 years
  • Government assistance of INR 1.5 lakh is extended for each beneficiary under EWS & LIG
  • A 4% and 3% subsidy on interest for loan amounts of INR 9 lakh and INR 12 lakh respectively
  • The Government is mulling the waiving Stamp Duty charges and reducing their impact
  • The middle-income group (MIG) of buyers with annual incomes above INR 6 lakh to INR 18 lakh is also included in the interest subsidy

Affordable Housing Price Segment Dominated Residential Supply in H1 2017

Source: Anarock Research

The affordable price segment dominated the residential units supply in H1 2017. The recent new launches trend shows that demand for affordable housing with ticket sizes in the range from INR 5 lakh to INR 40 lakh is continuously growing.

During the 1st half of 2017, the top cities (Bangalore, Chennai, Hyderabad, Mumbai, Delhi-NCR, Pune and Kolkata) recorded more than 60% of total residential units supply in the affordable segment.

The majority of projects in the affordable housing segment were launched in the peripheral boundaries of the top cities, largely due to non-availability of contiguous land parcels for large-scale mass housing developments and skyrocketing property prices in the central locations of our cities.

In H1 2017, the share of the affordable housing segment in new launch supply increased by 16% over the 2nd half of Year 2016. On the other hand, the mid and luxury segments witnessed a decrease of 4% and 9% percent respectively in the same duration.

A ‘Crash’ Course On Building Collapses

Anuj Puri, Chairman – ANAROCK Property Consultants

Over the last few years, there have been continuous incidents of collapsing old constructions in India.

As per data shared by the National Crime Record Bureau (NCRB), more than 14,000 people have died from 2010 to 2015 due to dilapidated building collapses. At an average, 2,700 people lose their lives in different structural breakdowns every year.

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ANAROCK Property Consultants Acquires LJ Hooker’s Indian Operations – Redwoods

PRESS RELEASE

ANAROCK Property Consultants Acquires LJ Hooker’s Indian Operations – Redwoods

Strategic acquisition to boost ANAROCK’s capability in integrated real estate solutions, dedicated design center in Bangalore

Bangalore, August 30, 2017 – Consistent with its focus on becoming India’s leading residential real estate solutions company, ANAROCK Property Consultants Pvt. Ltd. has announced the acquisition of Redwoods, the Indian arm of LJ Hooker, based out of Bangalore. The acquisition was closed today, with ANAROCK absorbing all Redwoods employees.

Anuj Puri, Chairman – ANAROCK Property Consultants says, “The acquisition of LJ Hooker’s Redwoods is in line to our overall business strategy and will help us augment our operations across key southern markets. It will give us unparalleled competitive advantage in offering customized real estate solutions. With its strong presence and unique multi-pronged approach, ANAROCK is decoding unmatched value for both B2B and B2C clients.”

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East Mumbai – From Industrial Belt to Major Residential-Commercial Hub

Anuj Puri, Chairman – Anarock Property Consultants

The eastern corridor of Mumbai – especially the suburbs from Ghatkopar to Mulund and Thane – has been witnessing a major transformation over recent years.

From being a largely industrial belt to developing into a hub for malls and premium residential towers replete with the latest amenities, the area has undergone a tremendous transformation.

Infrastructure projects have always had several positive implications for Mumbai’s real estate market, and what these suburbs are witnessing now is predominantly the impact of a significantly improved infrastructure scenario.

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2Q17 Sees India Residential Inventory Overhang Drop To 10-Quarter Low

Sales exceed number of units launched across India over the last 18 months

Anuj Puri, Chairman – Anarock Property Consultants

2Q17 marks a record low for units launched across India, even as sales continue to outdo new units getting constructed in a quarter for the 6th consecutive quarter.

 

A total of over 20,000 new units were launched across India’s top seven cities in 2Q17, while the corresponding number was slightly higher at over 26,000 units in 1Q17.

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Massive Investment Boost To Indian Residential Sector In 2017

Investments in Indian realty at $1990 million 1H2017; residential accounted for 54% ($1075 million) of total investments

Anuj Puri, Chairman – ANAROCK Property Consultants

In Indian real estate today, the untrained eye may see a dichotomy in the massive investments pouring into the Indian residential sector and the actual on-ground demand for housing.

A similar question mark was, in the past, also attached to the fact that developers kept churning out projects despite the visibly reduced uptake over the last couple of years. The fact is, there are always at least two storylines unfolding – the first and most obvious is the short-term story.

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Independent India – A Real Estate Perspective

Anuj Puri, Chairman – Anarock Property Consultants

In the 71 years since India gained independence, the country’s real estate market has changed tremendously. While it has not always been consumer-favouring throughout this period, it is certainly so today.

The country’s cities have expanded, new economic drivers have come in and jobs are being created at all levels. Likewise, appropriate housing is now being created for all income levels.

The current Government has taken the needs of the people to heart and deployed various policy initiatives to ensure that homeownership becomes affordable and desirable.

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Reaction To RBI’s Monetary Policy – August 2017

Anuj Puri, Chairman – Anarock Property Consultants

The repo rate has been reduced by 25 bps to 6.0 per cent, reflecting the slightly accommodative stance that the Monetary Policy Committee has taken as it agreed that headline inflation has come down significantly.

While many inflation upside risks have not manifested themselves as yet, the MPC feels that inflation may trend upwards going forward based on farm loan waivers, states passing on increased salaries / allowances  and expected pressures on food inflation. The RBI remains more committed to keeping inflationary pressures under check.

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