Indian real estate: A story of resilience and resurrection
India—with its growing infrastructure needs in retail, hospitality and commercial sectors—is looking at a slow but steady rise of its […]
Anushruti Singh January 18, 2019
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India—with its growing infrastructure needs in retail, hospitality and commercial sectors—is looking at a slow but steady rise of its real-estate sector post a turbulent phase triggered by a slew of initiatives aimed at weeding out black money from the system and making it more transparent. These initiatives were:
- The Real Estate (Regulation and Development) Act 2016 (RERA) which calls for setting up of bodies in each state for the regulation of the sector and also act as adjudicating authorities for speedy dispute redressal;
- The 2016 amendment Benami Property Act, which prohibits benami transactions—or transactions made by proxy with the purpose of laundering black money—and provides for confiscation of such property;
- Goods and Services Tax Act (GST), in which only GST-registered businesses are eligible for tax credits;
- Amendments in the Real Estate Investment Trusts (REIT) act that aim to increase liquidity in the sector; and,
- Demonetisation, which dealt a body blow to black-money transactions in real estate.
- residential sales grew by 6 per cent;
- new project launches rose by 76 per cent; and,
- office space leasing saw a high of46.8 million square feet.
- Transparent processes and paperwork
- Increase in investment
- Further streamlining and integration of reforms
- FDI and private equity
- Eco-friendly(Green) buildings
- Rationalisation of GST Currently, real estate is subject to both GST and stamp duty. One demand is the reduction of GST to eight per cent from the current 12 per cent across all housing segments by abolishing the current 60 square-meter GST ceiling. Also, the current land abatement rate of 33 per cent should be done away with in metros where land cost can go up to 70 per cent of the total unit cost.
- Proper single-window implementation Poor single-window compliance is one of the major reasons for delay in real-estate projects. Proper compliance of the system will clear out the operational issues and could turn out in reduced prices.
- Liquidity crisis in the sector RERA, demonetisation, and GST have stalled many real-estate transactions and the NBFC crisis further adds to the sector’s woes. This issue can be resolved via having a proper loan framework.
- Acknowledge the housing problem The first step in solving a problem is recognizing and acknowledging it. The sector is of the opinion that the government should not just recognize but also measure the magnitude of India’s housing problems in order to help real-estate players solve it.