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.

Currently, residential demand is still subdued due to the uncertainty brought on by many regulatory upheavals – all of which were necessary to make Indian real estate a better marketplace.

To begin with, the Government’s unexpected demonetization move late last year put a severe dampener on the resale market and also impacted the primary market to some extent.

Even as the markets were recovering, RERA and GST – both of which were predicted and expected – caused considerable confusion among both developers and buyers.

Taking a good look at the short-term story on the end-user side, the state of upheaval is a result of an enforced maturing process. The turmoil this process brings with it could be compared to the growing pains one experiences during adolescence.

However, the long-term story presents a far different – and, from the point of view of institutional investors, a very compelling picture.

Much like in the stock market, the most optimal entry point for residential real estate investors is the lowest one.

One does not invest when demand and prices are at their peak, but when they have ‘troughed out’ and when serious revival is imminent but not yet generally perceptible. Also, one does not invest when one’s investments are not protected by strong laws.

In fact, residential property remained the most preferred asset class in Indian real estate during H1 2017.

While overall investments in Indian realty touched $1990 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.

What drives this trend?

Institutional investors have for long been waiting for greater transparency in the Indian real estate market, which has now arrived with the deployment of RERA and GST.

While end-user sentiment is only beginning to revive now as clarity about the new regulatory changes emerges, the pent-up demand for homes is India is beyond question.

RERA will now ensure that only strong, credible developers with transparent business practices and ability to complete projects on time remain.

Simultaneously, the supply pipeline has moderated – partly because non-credible players are forced to withdraw from the market, and partly because developers are being more cautious with their project launches.

All indicators point towards a decisive return of buyer interest over the next 18-24 months. Institutional investors, who are almost by definition in it for the long haul, are squarely focused on the positive signals for the future now emanating from the Indian residential property market.

Demand has never been stronger

India still has a massive shortfall of housing, and the Government is displaying serious intent on fulfilling its promise to deliver Housing for All by 2022.

It has deployed several important policy-level initiatives to make housing more affordable for first-time buyers – and affordable housing a more attractive proposition for developers.

RERA is effecting a major clean-up of the industry, leaving only strong and credible players in its wake, while GST has ensured a uniform and transparent taxation regime.

A large-scale revival of the residential sector, induced by rapid-fire regulatory reforms backing a massive pent-up housing demand of around 19 million homes, is now more than possible in the next 18-24 months.

Unsurprisingly, institutional investors have picked this as the right time to deploy their capital into the Indian housing sector.

While affordable and mid-income housing is attracting the lion’s share of investments, institutional investors are also making calculated plays into select integrated townships, which they have correctly identified as the next stage of housing evolution in a country where infrastructure development is not keeping up with housing development.

Simultaneously, buyer sentiment has begun reviving on the back of rationalized property prices, reduced home loan interest rates and the fact that RERA now offers a viable level of protection to consumers.

To summarize

Already, market indicators now point towards increased sales during the coming festive season because of improved buyer confidence post-RERA. The RBI’s recent reduction in bank rates will also encourage buyers to expedite their buying decision to take the advantage of lower home loan rates.

During this festive season, tier 1 developers will become most active with launching new projects which had been kept on hold to meet the RERA norms.

On the investments side, all eyes are now on the opportunities that present themselves in a market which is poised for a full-fledged revival in the foreseeable future.

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.

It also highlighted how longer approval process under RERA is likely to delay launches and have an impact on growth of construction and ancillary activities. It is also relevant to note that there may not be another rate cut during the remainder of the year as the RBI will continue to look at inflation headwinds.

This stance of the MPC will also be important for global investors as the current stable interest rate regime in India will allow for better investor returns in India for global investors. This should keep investors reasonably attracted towards India.

There is already enough surplus liquidity in the system and the policy change may not result in a greater impact on real estate sentiment. However, it must be remembered that buyer sentiment has been impacted by a number of variables, including overall lack of affordability in the larger cities and the slowdown in IT/ITeS-driven employment.

RERA has also induced a go-slow in fresh launches, which means that there will be less fresh supply on the market. Consequently, prices are unlikely to reduce further – and more than interest rates, it is property prices which affect buying decisions.

Nevertheless, this monetary policy announcement sends out positive signals to global investors, who are already showing renewed interest in Indian residential real estate on account of the transparency reboot brought on by RERA and GST deployment.

A Closer Look At Boutique Luxury Homes

Anuj Puri, Chairman – ANAROCK Property Consultants

With the revival in Indian residential real estate well underway, it is pertinent to turn our attention to which formats have been in high demand at every given juncture.

Such awareness is primarily useful from an investor’s point of view, but anyone who tracks Indian real estate out of purely academic interest cannot fail to be interested, either.

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How Millennials Have Redefined The Indian Residential Market

Anuj Puri, Chairman – ANAROCK Property Consultants

By now, it has become quite clear that as a generation, Millennials have a very different take on home ownership than their parents and grandparents did.

This trend has been studied extensively in the West, but it has made itself quite obvious in India too. How do Millennials view home purchase differently in general, and in India in particular?

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Anuj Puri’s ANAROCK Appoints Rahul Yadav As Chief Product & Technology Officer

PRESS RELEASE

Anuj Puri’s ANAROCK Appoints Rahul Yadav As Chief Product & Technology Officer

Housing.com co-founder to drive the Firm’s thrust for high-tech enabled online residential brokerage

Mumbai, 3 July 2017ANAROCK Property Consultants, which prominent real estate industry stalwart Anuj Puri launched last month, today announced that it has appointed Housing.com‘s co-founder and ex-CEO Rahul Yadav as Chief Product & Technology Officer.

“This appointment is in line with ANAROCK’s highly technology-driven orientation and business model for its residential advisory services,” says Anuj Puri, Chairman – ANAROCK Property Consultants. “The online real estate business is still in its fledgling stage in India, and we are taking the lead on boosting it into maturity. So far, the real estate sector has not been able to emulate the success of ecommerce for consumer durables and services. We intend to change that, and Rahul Yadav’s experience in harnessing the consumer housing market at via technology will add the key element. The cutting-edge and highly consumer-focused technology platform and support infrastructure we will build here will bring in a complete transformation of the residential property business.”

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The Impact Of GST On Residential Real Estate

Anuj Puri, Chairman – ANAROCK Property Consultants Pvt. Ltd.

The switchover to the GST regime is undoubtedly one of the biggest tax reforms in post-independence India.  From July 1 2017, GST effectively cuts through a confounding Gordian knot of taxation complexity in the country.

In other words, it replaces the multiple taxes levied by the central and state governments and will become subsumed of all the indirect taxes, including central excise duty, commercial tax, octroi tax/charges, Value-Added Tax (VAT) and service tax.

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Anuj Puri Launches ANAROCK Property Consultants Residential Brokerage, Fund & Investment Platform

PRESS RELEASE

Anuj Puri Launches ANAROCK Property Consultants Residential Brokerage, Fund & Investment Platform

Fund will invest INR 300 crore in, Residential projects, targets USD 500 mn by 2020

Mumbai, 26 June 2017Anuj Puri, former Chairman & Country Head of international property consultancy JLL India, today announced the launch of ANAROCK Property Consultants Pvt. Ltd., essentially rebranding JLL’s erstwhile residential brokerage business which he acquired earlier this year.

Simultaneously, Puri announced the Firm’s real estate investment and fund platform, which will invest INR 300 crore in Residential real estate projects.

“We have chosen the brand ANAROCK with the motto ‘Values Over Value’ to reflect a business model and philosophy founded on the bedrock of Trust and Reliability,” says Anuj Puri, Chairman – ANAROCK Property Consultants Pvt. Ltd. “ANAROCK is the Group Brand, which will house multiple real estate services verticals. We will provide our regular residential advisory services which charges zero brokerage from our customers. Additionally, the Firm will operate a revolutionary business model of bulk-purchasing residential apartment inventory through a proprietary investment fundANAROCK will also provide debt, equity and mezzanine funding to residential developers. And this is just the beginning.” 

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Gurgaon Real Estate – Steady Growth Ahead

Anuj Puri, Chairman – ANAROCK Property Consultants Pvt. Ltd.

The suburb of Gurgaon has been an essential contributor to the urban sprawl that comprises of prime Delhi NCR. The region has become synonymous with a viral-like growth in the past decade and has assumed a homogeneous nature being a well-established business, housing and leisure hub.

The new residential growth comprising of multistoried apartments initially started along its major arterial roads of MG Road, Golf Course Road and later spread down along the main highway connecting it to Delhi–NH-8.

Further along the way as the city started to grow its wings, newer areas were opened up along the Golf Course Extension Road and newer sectors opened up along the proposed Dwarka-Gurgaon Expressway and both sides of the NH-8, beyond the second toll plaza.

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Housing For All By 2022 – The Clock Is Ticking

Anuj Puri, Chairman – ANAROCK Property Consultants Pvt. Ltd.

Affordable housing is not just about providing homes to the lower-income strata of society, though that is what the Modi government’s avowed intention behind the ‘Housing for All by 2022‘ doubtlessly is.

Affordable housing creation also has a direct and favourable correlation with the nation’s economy, as well as most other real estate segments. Housing for lower-income wage earners increases the economic strength of any city or region, as it attracts inward migration which creates a bigger manpower pool.

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