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  • By Anupama |
  • Feb 20,2018

Budget 2018 Real Estate Expectations(Gaine&Loss): Insight

The union budget 2018-19 evoked a mixed reaction from the real estate sector. It predominantly focused on the revitalizing the rural economy, agriculture, health and infrastructure sectors while the real estate did not receive much, as was expected from the budget. It received some gains while some expectations were not met.

As, after some pathbreaking reforms in 2017, the real estate sector was hoping for a revival, but felt dejected with a lack of emphasis on mainstream real estate sector reforms and demands.

Let's look at the gain and loss aspects of the budget for real estate sector

Gain: Push to asset classes

In Budget 2018, benefits for education sectors & health-care centres, such as ? 1 lakh crore for research, 1.5 lakh health-care centres, 24 new medical colleges and increased allocation for data centres, etc. were announced.

As the market is recovering at a fairly slow pace, analysts observe that investors will seek to place their money in alternative areas such as student housing, hospitality and senior living instead of investing abroad. Although it is a known fact that high income earning  Indians, prefer to buy houses in the United Kingdom (London) and in the United Arab Emirates (Dubai), where affordability levels are currently better than India.

Experts view that with this new announcement, investing in Indian asset classes will offer better returns.

Loss: Infrastructure Status

Last year, the industry faced - the demonetization, the RERA and the GST. The logistics and affordable housing sectors received the label 'infrastructure' tag recently in the budget, but the real estate sector is yet to receive it.  As any sector receiving 'infrastructure' status, directly helps the industry to get back on track (after reforms).

Experts expressed that, if it had been given to the real estate sector, it would have encouraged private players considerably to invest in real estate projects as there is a rise in demand and scope of earning profits from it. Also, there would be increased real estate activity, not only in metropolises and larger cities but also in Tier II / Tier III cities. It would have been a major structural reform that could have boosted GDP, increased employment opportunities, reduced the cost of home development and purchase, significantly.

Gain: Empowerment of Urban Bodies

Municipalities will be able to take care of their finances, thanks to the government taking steps, to create smart cities, ensuring better infrastructure facilities and initiatives like Swachh Bharat Abhiyan.


Taking the cognisance of the growing municipal bond market, the Budget announced - 142 cities are classified as 'investment grade'. This will help in strengthening the financial stability of the cities.  Experts say that by giving this, ease of living infrastructure programs of the government would seek the participation of private companies and relaxation in the investment grade to BBB-rated bonds will help more companies to borrow at cheaper rates.

Loss: Exemption for REIT

An important reform of the sector, the Real Estate Investment Trust (REIT), did not win this time. Levying stamp duty at the time of an asset transfer remains to be one of the key issues to be resolved. As per the present regulations, a real estate entity has to transfer the asset, which is part of the offering to REIT, before the opening of the issue for public subscription.

Therefore, entities will have to pay the stamp duty and obtain capital gains during the transfer of ownership, which affects the financial feasibility of retail investors. Therefore, the removal of stamp duty while transferring the land, is required urgently. This would make REITs a much more practical investment instrument and would encourage developers further.

Gain: Focus on 'Affordability'

The analysts believe that the incentives granted to the affordable housing segment have enough potential to revive the country's overall realty sector. Last year was a great year for the segment and recently announced Affordable Housing Fund strengthens it.

A significant GST reduction from 12% to 8% was given to realty sector and the government's recent announcement to build 51 lakh houses in rural areas and 37 lakh urban houses in 2018-19 is an additional boost. "The dedicated Fund will be created within the framework of the National Housing Bank (NHB) and the government assuming possession of the NHB from RBI is a welcome move", says Jaxay Shah, president of CREDAI National. Other possible avenues for the sector include the creation of industrial corridors dedicated to the defence manufacturing, incentives for the creation of agro-processing and agri-export promotion zones, etc.

Loss: Single Window Clearance

Currently, the major issue affecting the builders and developers is the lack of a single window clearance system, which is not addressed in the recent budget 2018. Commercial and residential projects suffer delays and increased costs due to a large number of approvals required from the municipality and other authorities, including environmental, fire and water departments.

Experts state that with the implementation of RERA, a digital technology enabled single window system is needed more than ever. Despite the introduction of several realty-centric policies by the government, a functional single window approval mechanism system is much-needed demand at present. This move will help in reducing costs that will further result in faster delivery of homes and improving builders' credibility.

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  • By Anupama Meshram |
  • Feb 13,2018

Real Estate Trends Which Will Rule Indian Real Estate In 2018

Many things happened in 2017 in the Indian real estate segment and almost overhauled the system. The market took time to stabilize and understand its nitty-gritty. It is anticipated that the year 2018 could bring cheer to both buyers and sellers, as last years policy changes and government of India's thrust towards Affordable housing, forced developers to change their traditional way of working and respect the consumer demands in time.

We are discussing some of the major trends which can be seen in the year 2018 and have the power to shape the Indian real estate market for the better.

1)     Enhanced International Reputation

As the capital flow from global markets in the Indian real estate is slowy increasing, more NRI's are finding country's real estate market as reliable one. As per the World Investment Report 2016-17, presented by the United Nations Conference for Trade and Development, has ranked India at fourth for FDI inflows. This surge has been due to improvement in the real estate regulatory framework at ground level, resulting in building an attractive investment destination for both Indian and global investors. The private equity is performing well with $ 32 million investment, last year.

2)     Change in Business Models by Developers

Now the developers are renewing their old business models. In early 2016, the developers launched many projects and there was no guarantee of completion of these projects. Now, through the RERA act, a deadline is given for these projects to be completed. It forces the developers to improve their business model. To avoid any penalty, the developers will have to bring greater transparency, as well as accountability in their system, to increase consumer confidence in them. In addition, the Goods and Service Tax (GST), as well as the Benami Transaction (Prohibition) Act 2016, will have a greater impact on how developers run their businesses. The developers must bring changes in the business models to sustain in the market.

REITs will also have a significant and long-term impact on developers, with the choice of either "corporatizing" or risking “take over”, by their larger counterparts. Corporate developers such as Tata, Mahindra, Godrej, etc. will acquire more projects enabling transparent and better housing projects.

3)     Rise of Hybrid Culture (Co-working Space)

More from India Inc. moving to "hybrid" spaces are causing a rise in the co-working / shared culture. In all metro cities, it facilitates the corporate culture and fully furnished work space to start-up companies and entrepreneurs with flexible working options at affordable prices. Companies with limited space requirements are renting their office space, which is giving rise to the "hybrid" space. This would help motivate employees, increasing productivity and cost-effectiveness to their income.

4)     Affordable Housing

The affordable housing segment will impact on the housing sector. According to the government's plans, by 2019 more than one crore houses will be built in rural India, with support from cheaper sources of finance. The external commercial borrowings and the refinancing of housing loans by the National Housing Banks would help in the growth of the sector. The home buyers have been given the option for affordable housing, where the carpet area has been changed from 30 sq. m. to 60 sq. meters from the saleable area. It is expected that the land prices would fall in the coming few years, as there is limited availability of a high-value currency due to demonetization.

5)     Industry Consolidation

There is an increase in real estate consolidations in all parts of India, due to the increase of developers, projects and lack of potential customers. This is paving way for the merger of different developers into one project. Joint developments and joint ventures will give more meaning to the real estate sector. This will lead to mergers between small and large developers, new struggling developers with strong players, also land-owners with new builders. This will attract more investors as the price earning ratio will improve for this sector.

6)     Tranformation of office Sector

Transformation of the Office Sector, as the REIT will be listed, builders will easily obtain funds to make buildings. The office sector would obtain financing from private equity funds. This will attract small investors, with a minimum risk appetite. They will know that the money they are investing in, is something that is concrete and will not lose its value. Investors would also know that their money is in safe hands.


With the growing trends in the real estate sector, people are now moving to small-scale investment. For Indians real estate investment, even on a very small scale, still remains a tried and tested means to build the wealth and cash flow for an individual.

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