Welcome to 2017!! I hope you must be having baffling thoughts about buying, investing and selling in indian real estate .
2017 is going to be a bountiful year when it comes to indian real estate and indian economy .
Many surprising twists in 2016 like demonetisation , RERA , GST , Benami transactions , FDI relaxation is likely to presage some dramatic changes in 2017.
All the policy changes and political announcements targeted at real estate in 2016 will begin showing their effects in this year. Benami Transaction Act, Demonetization, Digitization of land records etc. affected the real estate sector in 2016 but it has not been concluded whether these changes have been good or bad for the industry. In this year, with the implementation of these reforms, a clear picture will be revealed and the pros and cons of these policy changes will be seen.
Here is a short list of positive impacts of Indian Real Estate :
1) Housing loans will be cheaper, thus boosting housing demand
2) Due to boom in start up culture , commercial real estate will be witnessing a huge demand.
3) RERA will bring transparency and more trust in sector .
4) Buyers are going to have the best time in 2017.
5) More credible , reputed and organised players will play in the field
6) Commercial market will surely bright up in 2017
Lets see in detail what we have in store for Indian Real estate
With growing IT industry, especially in the south, the demand for commercial spaces is on an increase. 2017 sees a demand supply gap in commercial spaces in cities like Bengaluru, Pune, and Hyderabad. Due to the investment from companies like Apple, Google, Amazon, the demand for commercial property will rise and hence, the rents of commercial properties will increase because of shortage.Commercial Segment is spreading its base in real estate. The growing demand for infrastructure and IT hubs is a reflection of the commercial section growth. This is how demand in different commercial segments is predicted:
- Industrial: Online business, warehousing and transportation have increased enormously. The growing manufacturing industry has also created demand for commercial real estate. Last, but not the least, Delhi Mumbai Industrial Corridor (DMIC) has shown significant boost in real estate.
- Retail: In 2016 many retail giants has entered in India and these giants will be spreading their wings overall the country surely in 2017 which will ultimately create demand for retail sector. CAGR (compound annual growth rate) is expected to increase by 8% from USD 518 Billion in 2012 to USD 850 Billion in 2017 and it is also expected that the absorption will reach 15 million sq. ft. till 2017.
- Office: With the boom of Startup culture in India office space requirements are already in high demand and it is expected that almost 40% of the office space consumption in 2017 will be done by these companies.
- Primary Market: In 2017, sale in primary market across cities will rise as prices of the units are already at the lowest and with the changes in repo rate housing loan is now cheaper. Also Real Estate Regularity Act notification are already announced in some states and rest will be coming with it soon, majority of the builders are in rush to complete their delayed project to avoid penalties. Real Estate will be witnessing huge number of project delivery in 2017. This will also boost buyer confidence in investing Primary Market.
- Secondary Market: Demonetization has led to a decrease in the cash which in turn reduces the demand. However, there could be some increase in the demand due to lower interest rates. But the decrease in the cash will outperform the lower interest rates that will keep the net demand less than the supply, bringing down the prices in Secondary Market. This trend is expected to continue till liquidity comes again in the hand of buyers and government bridges gap of circle and market rate.
Government Announcement to promote housing sector
Promoting housing is one of the biggest agenda of present government. On New Year eve our honorable Prime Minister Shri. Narendra Modi announced following scheme which will boost Real Estate in 2017.
- Housing loans at lower interest rates: PM Awas Yojana beneficiaries to get 4% relief on loans up to Rs. 9 Lakh and 3% for loans up to Rs. 12 Lakh.
- Loans of up to Rs. 2 Lakh taken in 2017 for new housing or extension of housing in rural areas will receive interest subvention of 3%.
- Number of houses to be build under Pradhan Mantri Awas Yojana – Gramin has been increased by 33% i.e. from 3 Crore to 4 Crore.
Overall, 2017 will be bringing many good things for the industry which will make Real Estate Industry more transparent, trustworthy and reliable. In nutshell 2017 will be the year of biggest transformation for Indian Real Estate.