One common question on every property buyer and investor’s mind currently is whether the price of real estate will increase, decrease or remain constant. Especially when 2016 ended with a drastic step taken by Prime Minister of India to demonetize 500 and 1000 currency notes. Every sector of the country is affected by the move, including Indian Real Estate which is likely to face long-term consequences, mostly with a short-term drawback and long term benefits!
2016 also saw some of our decade’s biggest changes in terms of policy grants. The most significant being— the passing of Real Estate Bill that offers transparency and accountability in the industry. Furthermore, game-changing policies like GST, RERA, and Benami Transaction Act helped the customer to make accurate decisions. 2017 looks hopeful for property buyers, here are 7 trends to look for that will reshape the Indian Real Estate Market.
Fall in Land Transaction
It is no surprise that majority of the property transactions in India happen via currency notes to avoid tax payment. Only 20% of value is transferred using cheque, loans from a bank or online transaction which are liable for tax return. Right from developers, engineers, and labourers, everyone prefers taking cash payments over another mode of transaction. Now, with the scarce amounts of cash in hand, the next few months will witness a deep drop in land transactions until the market settles down.
Property Prices will drop
Housing price in 42 major Indian cities, including Chennai, Mumbai, New Delhi, Kolkata, and Bangalore is predicted to drop by 30% over 6-12 months after the currency ban move. A subscription-based real estate data and analytics platform– Prop Equity said, “residential real estate valuation in the top 42 cities in India, sold and unsold, will take a tumble and fall up to 30% from Rs 39,55,044 crore by approx. Rs 8,02,874 crore to Rs 31,52,170 crores,” Meaning, there might be a short drawback, but in the long run, Indian realty sector will hugely be benefited with transparent transactions. You can also take this time to understand how purchasing a home in New Year can be beneficial for you.
Real Estate Regulator Bill will encourage fair deals
Real estate (Regulation and Development) bill was passed by the Rajya Sabha on 10th March 2016 and the Lok Sabha approved it on 15th March 2016. The bill came into force on 1st of May 2016 with 69 of 92 notified sections. This bill will help property buyers to make an informed move towards accountable, clear and fair deals in real estate sector which is often denoted as notorious for delays and overpricing. Under the act, property developers will have to secure 70% of the project funds using a bank account. The developer will have to share every small detail including project plan, government approvals, schedule of completion, layout etc. with the State Real Estate Regulatory Authority (RERA) and then pass on the information to the consumers. In other words, Indian Real Estate Market is reshaping towards clear and fair deals.
Commercial Space will Experience More Demand
Commercial sectors such as manufacturing, logistics, transportation, etc., displayed positive signs in 2016, and that is expected to continue in the coming years. Most notably, there was a trend of a start-up ecosystem, which gave individuals and freelancers an opportunity to work alongside these start-ups, in turn increasing the demand for co-working spaces. More than a hundred of these business centres were launched in India that works as an incubator for the start-ups. This trend is perking interest among companies to buy or lease commercial space and distribute to the start-ups.
NRI Investors can expect higher ROI
2017 is probably the best time for NRIs to invest in Indian real estate market – one because the property price is expected to drop and secondly due to transparent transactions with low-interest rates will benefit NRIs in the long-run. Also, NRIs that are looking to invest in a luxury property in India can expect higher Returns on Investment in comparison to investing in their residing country.
Retail Malls will Absorb More Space
According to a survey conducted by Global Retail Development based in America, India is the 4th best country for retail investment, among 30 emerging markets. Investing in retail malls has always attracted investors under various categories such as coffee shops, pubs, showrooms, restaurants and more. The year will review profitable for other retail categories including telecom services, clothing, salons, accessories, mobile and fitness.
The sector will drive Technological Advancement
With the “Smart City” initiative by the government, real estate will genuinely drive technological advancement. People these days are interested in investing in the tech-enabled workplace with automated security system and wireless connections. Hence, developers will have to establish a full-fledged IT infrastructure in order to drive sales.
These future trends are expected to reshape the Indian Real Estate Sector benefiting developers, builders, and buyers, but will also be great for investors, who contribute majorly to Indian Realty Market. However, Real estate market is subjected to uncertainty; hence a lot of trends now will depend on the demand generated and supply offered.