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9/19/2017

Major trends in Indian real estate in 2017

The real estate is one of the most powerful sectors of the Indian economy. It solitarily contributes 5 – 6 percent of the country’s gross domestic product and the real estate market is expected to touch 180 billion USD by 2020.

This fact is in itself opening new possibilities and fresh arenas to the developers and realtors of the real estate market. While the latest laws and government policies like the RERA Act and the impact of GST have implemented many changes in this market, many real estate pros believe that these trends observed in the real estate market are shaping or reshaping the market in 2017. 


Here are the major trends in Indian real estate that will restyle the market and present more opportunities - 

There will be an increased global cash flow into the real estate market 

India is witnessing endorsements at the highest levels along with observable equity investments since last year. India was also ranked fourth in all of the developing Asia for FDI Inflows as per the World Investment Report published in 2016 by the United Nations Conference on Trade and Development. 

The increased capital flow was observed as the real estate sector in India has been able to catch hold of 32 billion $ in private equity so far. This ultimately led to an increase in the global cash flow to a maximum of $ 5.7 billion.  

Though the last year was not able to beat the highest private equity inflow of 2007, 2017 did pretty well in terms of it despite the Brexit and Visa related uncertainties from the US. The credit for this goes to the strengthened economy of the nation that is both growing as a modern economy and attracting investors from all over the world. 

The phenomenal improvements in the structural reforms and more liberal foreign direct investment regime have led to a better rank of the Indian cities in the global market. India's Tier-I cities have now moved up to the 36th rank in JLL's 2016 bi-annual Global Real Estate Transparency Index 

Also, the increase in the regulatory framework, increased transparency and the Real Estate Investment Trusts (REITs) is making the real sector of the country a one-stop destination for investors.

Fresh and revamped models are seen as a result of various policies

The year 2017 has also seen many new policies and reforms taking place that has affected the real estate sector majorly. This, in turn, has led the realtors and developers to revamp their business models and work according to the new guidelines. Two major policies that have impacted and led to distinguished trends this year are the RERA Act and the GST. 

The number of new residential project launches was low as compared to the units sold in 2016. But owing to the Real Estate Regulation & Development Act (RERA), the landmark law will enforce and most of them will fall into place. There has been a promotion of activism for the buyer leading to increased transparency in the real estate buying and selling process and increased consumer confidence.

On the other hand, the Goods and Service sales tax and the Benami property Act have also impacted the way developers run their business models. The current trends have forced the developers to restyle their business models if they want to stay in the real estate business at all. 

While residential demand of property is set to increase by the end of 2017, many prominent builders like the Tata, Godrej, L&T, Bharti, Mahindra, etc. Are acquiring more projects especially in the affordable housing regions.

An increase in the affordable housing residential projects is observed

One of the most important trends taking place this year is the affordable housing schemes as one crore houses are to be built in the rural area by 2019 as the government guidelines. This is leading to cheaper sources of finance along with refinancing of the housing loans given by the National Housing banks (NHBs).

The main idea is to create as many houses for the people of the country so that everyone can own a dream home by 2022. Another major progress to the affordable housing scheme is seen by the Credit-Linked Subsidy Scheme (CLSS) for the mid-income group that has a provision of Rs 1,000 crore. Also, the extension of housing loans under the Pradhan Mantri Awas Yojana (PMAY) has increased to 20 years from hitherto 15 years. 

The era of co-working or hybrid spaces

There is also an observable popping up of co-working spaces even in the tier II cities of the country. It is providing startups with flexible working options at an affordable rent. 

The idea flexible hybrid spaces are not only providing the opportunity of easily initiating a business but also providing many remedies like cost efficiency, employee motivation, and retention boosted productivity along with ease of scaling etc. Thus, co-working operators are leasing out spaces to move into a hybrid sort of space.


Better industry reinforcement is to be observed
The hitherto overcrowded real estate sector is set to be a bit more transparent and leaner owing to consolidation happening in many ways such as joint ventures between landowners and or small developers with bigger, better-organized players, smaller developers who are being bought out by the larger players of the real estate. 

This is taking place since slow sales and lack of financial wisdom id being observed by various developers. There are chances that some developers and landowners may jump into consolidation at once, while others still wait for major changes to happen and prefer to be on a back seat. It is estimated that the next five years will see major consolidation in the real estate in which the larger players are thought to be at strength by 2021. 

The real estate presents a bundle of opportunities for the investors as well the buyer this year with major trends persistent. Whether it is in the residential housing region through the means of affordable housing or transformation of the office sector through REIT, a fervent financial stratum in the real estate sector is set to be observed in the coming years.  

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