The financial year 2016 – 17 was a true example of any developing economy which was marked with both ups and downs for the real estate sector. Where one could see the peak of the sector in the past couple of years during the festive season, suddenly after it, demonetisation crippled the sector to its bottom most for the upcoming two months. But with things like RERA, Smart Cities Mission and Housing for All in the pipeline, the sector is expected to perform better than ever. As one of the highest contributors to the country’s GDP and an end user to over 30 allied industries, very high hopes rest on this sector to perform well in order for the economy to revive.
Smart Cities to get active on the ground:
Work on the Smart Cities Mission will have to start this year in order to achieve the deadlines which have been set. A lot of progress has also been achieved on papers for the shortlisted cities and many of them are almost on the verge of starting visible work. This financial year will see good amount of fund allocation towards this mission and ground work progressing rapidly in the initial days to make up for the lapses if any.
RERA to be live:
RERA is expected to be implemented in full force near to the starting of the year which will mean a much refined environment for the developers to work. Developers are certainly well prepared for this change of the era post RERA. The impacts are certainly going to be visible for both buyers and developers. Developers who are not able to deliver on their promises would be automatically filtered out reducing the existing supply in the market where they would be answerable for what is being done at each stage of project development. Buyers on the other hand would be assured of timely deliveries or assured penalty charges in cases of delays but simultaneously would see the property prices going up because of the supply reducing drastically.
Housing for All to be a Saviour:
Budget Housing will be the main target segment for both developers and buyers in the upcoming year under the mission of Housing for All. The government has already taken note of it in advance and provided multiple relaxations for both the parties in two consecutive Union Budgets and other independent announcements. According infrastructure status to affordable housing and clearing out norms for it was major step which will now see more and more parties showing keen interest in developing budget housing projects.
Infrastructure to hold key:
Infrastructure is being given ultra importance for quite some time now and was evident in this year’s budget as well where almost INR 4 lakh crore was allocated towards infrastructure development in the country. Every resident and user thrives for a habitat which is able to meet there daily needs and, infrastructure and connectivity plays this role of fulfilling the need. Smart Cities and Housing for All would make us witness large scale infrastructure overhaul in the country.
RBI to play Apex Role:
On top of it all, the Reserve Bank would play a key role in deciding the fate of this sector through its bi – monthly monetary policy reviews. The apex body has already created great pressure on FIs to drop down on their lending rates and with subsequent rate cuts; this pressure is bound to grow higher. Total cuts of about 100 bps in the current repo rate would mean lending rates coming down close to 7% which is sure to enthuse more confidence in the market.