Connect with us

Industry

2017 In Retrospect: Realty faces slowdown, up for recovery post RERA

Published

on

Real Estate Sector
Under-construction skyscrapers. (File Photo: IANS)

By Bappaditya Chatterjee

Kolkata : The real estate sector, which witnessed a slew of policy measures through the year, experienced a market slowdown but the affordable segment emerged as its growth driver, say property consultants and developers.

The policy reforms, however, promise to make residential real estate dealings more transparent than ever before and the market is expected to see at least a partial recovery in 2018 on the back of revived confidence of home buyers, fewer new launches, improving sales and declining unsold units.

The Centre’s surprise demonetisation announcement late last year was a “real shocker” for the sector. But, simultaneously, it helped the sector to resist unaccounted funds from finding their way into the secondary and even primary sales segments as well as the luxury housing section.

Meanwhile, the Real Estate (Regulation and Development) Act (RERA) was rolled out to improve financial discipline, boost market transparency and give consumers confidence and a clear legal choice for dealing with errant developers and brokers. The Goods and Services Tax (GST) was introduced to improve taxation transparency and the Benami Properties Act got further amended to make it more effective in curbing anonymous real estate transactions and ownership.

“There were reforms galore which literally altered the DNA of the Indian real estate business, focusing on eliminating black money and improving market transparency so as to make the country’s residential real estate a better place for consumers and investors,” Anarock Property Consultants’ Chairman Anuj Puri told IANS.

Real Estate Sector

Greater Noida: Under-construction skyscrapers in Greater Noida. (Photo: IANS)

National Real Estate Development Council Vice Chairman Parveen Jain said all stakeholders adopted a wait and watch policy following the note ban and introduction of RERA and GST.

“This resulted in a somewhat slowdown in the sector as everyone was trying to understand the after-effects of demonetisation and the effects of RERA and GST. No one is willing to venture into new deals until and unless things settle down,” Jain told IANS.

GST, applicable to the purchase of homes in under-construction projects, prompted home buyers to either buy completed projects or hold back their purchase decisions. Also, developers halted sales in projects not registered under RERA across major cities, JLL India CEO and Country Head Ramesh Nair said.

“These factors led to a quarterly sales decline in five of the top seven cities to an all-time low of 4.8 per cent in the third quarter of 2017,” Nair told IANS.

Residential launches up to the third quarter of 2017 saw a decline of 33 per cent compared to the same period in 2016. Simultaneously, affordable housing saw a rise of 27 per cent in the first three quarters, mostly by taking advantage of the new government regulations and incentives for homes in that category.

“Affordable housing is an attractive proposition both for developers and consumers as the demand is huge and largely unmet. The high focus of the central government has resulted in the availability of more funding options for the developers such as ECB, FDI and debt-financing from national financial institutions at highly competitive rates,” Cushman & Wakefield’s Senior Director, Research Services, Siddhart Goel told IANS.

However, the flip side is the implementation RERA by the states. As per the central government schedule, by the end of July 2017, all states should have implemented the RERA with full functionality.

“Many states are still either in the process or don’t have requisite infrastructure. Dilutions in a few RERA rules by a some states, has also hurt buyer confidence,” Knight Frank Chief Economist Samantak Das told IANS.

According to an ICRA study, by the close of third quarter of 2017, most of the major states had notified their real estate rules and set up real estate regulatory authorities as required under the RERA Act. While new project launches have remained subdued even after RERA implementation, the developers continue to push sales in ongoing projects, with expectations of improved customer confidence in those projects which are approved by the state RERA.

However, the inclusion of land and real estate (completed properties) under the ambit of GST has been a topic that has been debated significantly and will ultimately require a political solution since land is a state subject and any such move will require the concurrence of state governments.

“Any such move could bolster the transparency and compliance of real estate transactions (especially in the secondary market) since there would be an incentive to report transactions at market price to claim full tax benefit,” said Shubham Jain, Vice President and Sector Head-Corporate Ratings, ICRA Limited.

The industry is expected to somewhat stabilise in 2018 as both real estate developers and customers become attuned to the changed regulatory scenario.

Developers are likely to take a cautious approach as far as new project launches are concerned, given the over-supply situation in various markets, along with their own stressed balance sheet positions.

The focus is likely to remain on liquidation of existing stock and reduction of the debt overhang before new projects are launched. This is already visible from the trend of decreasing quantum of absolute stock of unsold inventory available with the developers.

IANS

India

‘Ex-HAL chief’s statements on Rafale factually incorrect’

Published

on

Rafale deal scam

New Delhi, Sep 20 : Government sources on Thursday dismissed as “factually incorrect” media reports of former Hindustan Aeronautics Limited (HAL) chief T.S. Raju claiming that the defence undertaking had signed a work-share contract with French company Dassault Aviation — the manufacturer of Rafale fighter jets.

“In the news item published (Thursday) ex Chairman and Managing Director, (CMD) HAL has been quoted as stating that an agreed work-share with Dassault Aviation (DA) was submitted to government. The same news item also referred to the cost of the aircraft, life cycle cost issues, etc. The statement attributed to ex CMD, HAL is factually incorrect,” said the sources.

The sources said that Raju was a member of the Contract Negotiations Committee of the Ministry of Defence (MOD) and “there were many major areas of disagreement between HAL and DA”.

They said that the HAL, in a letter on Oct 10, 2012 to the MOD, “brought out these disagreements pertaining to the work-share between them”.

“Subsequently in July 2014, HAL in its letter to MOD has also highlighted one major unresolved issue regarding responsibility sharing between DA and HAL for licence manufacture of the aircraft.

“Further, the man hours required for manufacture of various components of the aircraft in HAL was also a point of disagreement between DA and HAL. There is, therefore, a contradiction in the claims attributed to Raju,” they said.

The sources also said that the since the work-share between DA and HAL was “never agreed upon”, the statement claiming lower life cycle cost is “completely presumptive”.

They said that because of these reasons, the proposal for 126 Medium Multi-Role Combat Aircraft (MMRCA) could not be progressed further.

In an interview to a national daily, Raju who retired from the HAL on Sep 1, asserted that HAL “could have built Rafale fighters in India had the government managed to close the original negotiations with Dassault”.

Riding on Raju’s statements, the Congress led by its president Rahul Gandhi demanded Defence Minister Nirmala Sitharaman’s resignation accusing her of “lying”.

The party claimed that Raju’s remarks “nailed Sitharaman’s lie” that HAL didn’t have the capability to build the Rafale.

Continue Reading

India

Modi, Hasina jointly inaugurate oil pipeline, railway projects

Published

on

Narendra Modi Sheikh Hasina

New Delhi/Dhaka, Sep 18 : Indian Prime Minister Narendra Modi and his Bangladeshi counterpart Sheikh Hasina on Tuesday jointly e-inaugurated the construction work of a cross-border oil pipeline and a railway project, with the former describing the two countries as members of the same family.

Hasina and Modi joined the event in the evening via video-conferencing from Dhaka and New Delhi, respectively.

The 129 km India-Bangladesh Friendship Pipeline connecting Siliguri in India with Parbatipur in Bangladesh will transport petroleum products from Numaligarh Refinery in Assam. Of the total length, 124 km will be constructed in Bangladesh and 5 km in India.

“Geographically we may be neighbours, but emotionally we are members of the same family,” Modi said while addressing the programme.

“Our mutual cooperation in the last few years has shown the world that when two neighbouring countries strive to work together, what all can be achieved,” he said.

“Whether it be a decades-old border problem or development aid cooperation project, we have made unprecedented progress on all issues.”

At the same event, the ground-breaking ceremony of a rail project to improve Dhaka’s connectivity with Tongi and Joydebpur, two towns on the outskirts of the capital city, was also held.

Officials said 48.80 km of the two new dual gauge rail lines would be constructed on the Dhaka-Tongi route and a 12.28 km new dual gauge railway double line on the Tongi-Joydebpur route.

Tuesday’s inauguration of the two projects came a little over a week after both the Prime Ministers inaugurated two railway projects and an electricity project on September 10.

Stating that the pipeline will further boost bilateral cooperation, Modi said that energy was the cornerstone of any country’s development.

“The pipeline will help in the development of the northern Bangladesh. Though it is being done with grant-financing from India, the project will be dedicated to the people and government of Bangladesh once completed,” he said.

Modi said the railway project will not only bring relief to road traffic in Dhaka, but also boost freight revenues.

Speaking from Dhaka, Hasina said that ever since she formed her government in Bangladesh in 2009, she has been working relentlessly to deepen ties with India.

She thanked Modi for the new projects which she said will help in Bangladesh’s development.

External Affairs Minister Sushma Swaraj and Petroleum Minister Dharmendra Pradhan joined the video conference from Delhi and Bangladeshi Foreign Minister Abul Hassan Mahmood Ali from Dhaka.

Continue Reading

Business

No relief in sight from rising oil prices

Published

on

Dharmendra Pradhan

New Delhi, Sep 12 : There is no relief in sight from the rising petrol, diesel and gas prices which are burning a hole in the consumers’ pockets.

The government on Wednesday eluded questions on the subject at an official media briefing here, with Petroleum Minister Dharmendra Pradhan asserting that he would not answer questions outside of the day’s Cabinet decisions.

“We will confine ourselves to the Cabinet decisions only,” Pradhan told IANS when asked if a relief was in the offing from soaring oil prices.

The Minister also chose to keep mum when asked if the Union Cabinet discussed the issue on Wednesday.

On Monday, Pradhan had an hour-long meeting with BJP President Amit Shah after the opposition organised a Bharat bandh on the issue.

Continue Reading

Most Popular