Realtors expect property prices to rise with approval of RERA by govt

City-based real estate developers expect a rise in property prices as a result of consolidation of realtors under the Real Estate (Regulation and Development) Act, 2016.

Welcoming the rules approved by the Karnataka government for RERA, property developers said the new act would usher in transparency and build trust between developers and customers. “From the long term point of view, it is very positive and will help in bringing in transparency and trust,” Om Ahuja, chief executive officer —  Residential at Brigade Enterprises said. Ahuja also expects the consolidation of realtors to take place in the market in the next nine months as a result of RERA implementation.

As a result of this consolidation, the units supplied in the market will come down. With real estate demand increasing due to the urban sprawl, the prices are likely to go up.

This will also nullify the decline in the prices arising out of Goods and Services Tax (GST) rollout, Ahuja said. Realtors across the state are set to pass on the GST benefit to consumers in the range of 3-4%. However, according to Ahuja, property prices will go up by 8-9% by this year end due to implementation of RERA.

“RERA will further boost the confidence of the home buyer who till now was a little hesitant, which will help the entire real estate sector, especially the residential segment. The gazette notification will be out in the next three to four days, which will give more clarity on the entire subject. We hope the specification in the act will further augment the growth of the industry,” Ashish R Puravankara, managing director at Puravankara Ltd, a property developer, said.

Shantanu Mazumdar, director at real estate advisory firm Knight Frank, however sought more clarity on the legislation. “We don’t know whether it’s 60% of funds spent or 60% of project completed,” he added.

The Cabinet has decided that projects that are 60% complete or have executed 60% of the sale deed will be exempted from rules formulated by the state.

Shashidhar Pai, managing director, Citrus Ventures said, “It is a very pragmatic approach by the Karnataka government in fixing the threshold for applicability under RERA.

“The government has demonstrated it means serious business by bringing even BDA and KHB projects under the ambit of RERA. This also presents a window of opportunity for smaller developers to complete and exit the sector without litigation. In the next 12 months, we will see contraction in the number of players in the market.”