2019 A Comeback Year For Residential Real Estate in India
The emergence of new asset segment like student housing coupled with the increased number of eligible buyers to benefit from marginal GST rates and subsidized home loans, the Residential Real Estate market in India is on the road to recovery. The Indian Real Estate market which has witnessed a slowdown in the recent past has always been a lucrative and robust sector with an annual return of 20 percent during 1991-2014. But with the lower expected growth rate, the sector needed innovative initiatives for revival. The GST & RERA are some of the important reforms among others which are contributing to the revival of Real Estate Sector. After implementation of RERA & GST a 6 percent growth in residential sales is observed across 8 major cities in 2018 with the 11 percent drop in an unsold inventory levels and 75 percent increase in new launches in 2017. With the positive growth in both residential & commercial Real Estate markets, the sector in India is all set to become 1 trillion market by 2030 according to the estimates.
The introduction of structured reforms like RERA & GST has had their impact on the regulatory framework of unorganized sector, creating a space for the markets which are more mature & consolidated and therefore have the ability to attract more investment & sustainable growth.
With the introduction of GST, like RERA it introduced more accountability & much need transparency in the Real Estate sector with a great compliance & simplifies tax structure which again has played a very pivotal role. With GST rate cut from 12 percent to 5 percent in the Premium Housing segment will further help in boosting the demand for housing.
Not only the structural reforms but at the same time government incentives such as ancillary benefits that increase the purchasing power of buyer which in turn will boost the housing supply. Some of the examples are full tax rebate for income up to 5, 00,000/- tax deduction from 40,000 to 50,000 and the most important of all is the increased investment in the development of infrastructure & connectivity.
The interest subsidies on home loans provided by the government under special schemes to different sections of the society like Lower Income Group (LIG), Economically Weaker
Section (EWS) & Middle Income Group (MIG) has only been possible because the government has also extended the credit linked subsidy scheme till March 2020.
Looking at the initiatives taken by the government and the market responding to such initiative in a very positive manner, one can say with a confidence that Residential Real Estate market is all set to come back in 2019.