2018: real estate rises after reboot

The Indian economy and, indeed, real estate have experienced a 'systems reboot'. The new paradigm includes various encouraging initiatives by the Union government, along with a new regulatory regime. This has completely changed the face of the country's real estate sector. The positive effect is expected to become apparent in the upcoming years.

The new regulatory regime is largely about steps, which include streamlining approval processes, simplifying taxation (GST), building institutional capacity, as also introducing urban planning and real estate-related reforms (RERA and REITs).

The initiatives, such as '100 Smart Cities', the DelhiMumbai Industrial Corridor (DMIC) and Pradhan Mantri Awas Yojana (PMAY) offer the perfect platform to create investment opportunities across projects, across the country. Transparency, financial discipline and customer safety mechanism, put in place through reform-led policies, will attract investment back to the sector.

As we enter 2018, the time seems right for the government initiatives as well as the new regulatory regime to have their effect on the Indian real estate, especially for home-buyers. I foresee 2018 as a year when Indian real estate will build a growth story, based on the ideal foundation which has been created, towards a positive future. The year comes with the promise of growth amid home seekers getting their 'dream homes' while for investors, it should reflect enhanced attractiveness as an asset class.

The one change that we can expect is in attractive investment options in the sector: no longer just from the residential segments but also from commercial spaces that have come up as attractive alternatives.

In terms of growth trends, industry pundits suggest that the positive streak witnessed by commercial real estate in 2017 will continue well into 2018 and beyond. These include retail, warehousing and logistics parks.

Given that the new regulatory environment enhances safety and security for investors, the investment options should create newer success stories in real estate. These are largely macro factors, but even at the individual investor level, the picture in 2018 is just as bright.

Real estate, as an investment class, has always delivered consistent returns to investors, and has largely seen repeat investments over the years. In 2018, this sector can be positioned as the best asset to invest in, with better 'return on investment' (ROI) in the long run.

Surplus scenario

Real estate in the country needs to learn from the aviation and telecom sectors, where enhanced availability of the product has a direct effect on the selling price. A surplus scenario as regards production and creation has the ability to bring down the cost, and fulfil the needs of everyone. The prime minister's 'Housing for All' initiative is a step in the same direction, and its successful implementation is imperative.

Across cities, we have been seeing the mushrooming of unauthorised developments. This emphasises the importance of development of peripheral towns and twin cities, as also the '100 Smart Cities' initiative. The 'Housing for All' scheme is directly linked to the growth of connectivity and infrastructure, and will flourish in such locations.

One aspect where 2018 will build on the growth trends of 2017 is affordable housing, which emerged as the driver of real estate growth last year. The government has given this segment initiatives and support, and we expect this to continue this year. Home finance being at record low-interest levels has provided the extra boost needed to ensure that one's 'dream home' becoming a reality in 2018 with a home loan.

The Indian real estate sector looks very bullish and I expect it to grow at a compound annual growth rate (CAGR) of 15%, year over year basis. I foresee the dream of 'Housing for All by 2022' becoming a success with proper infrastructure and connectivity. Infrastructure will be a focal point of not just job creation but also high trajectory growth rate. Its growth will bring in a radical shift and a paradigm change in the real estate scenario.

In a country where there are other asset classes that offer alternatives to investors, 2018 should see real estate bouncing back as the preferred option to grow wealth.

The protection which buyers and investors will get in the new regulatory regime will enhance its attractiveness as an investment class.

(The writer is Founder & CMD, Hiranandani Communities; and President (Nation), National Real Estate Development Council (NAREDCO))

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