REALTYLOOKBACKAT2016ANDOUTLOOK2017

Theyear2016willgodowninthehistorybooksoftheIndianrealestatesectorasoneof
themosttransformingyearsforthecountrysrealestatedivisionwheretherewerebig
announcementsalongwithabitofbumpyrideshereandthere.Beingoneoftheprime
contributorstowardsourcountrysGrossDomesticProduct(GDP)andemployment
generation,alotisalwaysexpectedoutofthissectorfortheeconomicgrowth.Thissector
aloneisresponsibleforbeingauserforover30otheralliedindustriesandsectors;andaswe
bidgoodbyeto2016andgearupfor2017,alothaschangedsincethebeginningofthisyear,
whereseveralmajorannouncementsweremadeandinfrastructuraldevelopmentscameoutas
thehighlight.Muchwasdeliveredduringthecourseandalotstillremainsinpipeline,where
realestatesectorwillonceagainbeanimportantcontributorin2017aswell.
YearofKeyDecisions
2016turnedouttobeayearwheremajorpolicydecisionsandimplementationscameinto
being.MajorbillssuchasRERA(RealEstateRegulatoryAuthority)andGST(Goodsand
ServicesTax)werepassedduringtheyear,allowingthesectortobecomemoretransparent
andsystematic.ThepassageofGSTandRERAhasbeenoneofthebiggesthighlightsofthe
yearthatissuretobenefitthesectorinthelongrun.Monitoringandsupervisionof
transactions,clarityoftaxstructurewhilebuyingpropertyandtransparencyinthesector,
werethedesiresofeverybuyerthathasbeenfinallyansweredbythepassageofthesetwo
billsespecially.Bytheendofsecondandthirdquartersnextyear,wewillhavevariousstates
implementingRERAwitharegulatoronboard.EvenGST,whichhasbeenpostponed,will
becomeoperationalbytheendofthirdquarternextyear,statesAvneeshSood,Director,
ErosGroup.
ApartfromthepassageofGSTandRERA,UnionBudget201617sawmajorreliefsforthe
affordableandrentalhousingsegmentsinthecountry.EventheReserveBankOfIndia(RBI)
slashedtheRepoRatebyatotalof50basispointsduringthiscalendaryear,therebypushing
thebankstoreduceitslendingratesforthepotentialbuyersandhelpingthedemandtomove
forward.Workontheinfrastructurefrontsawamajormomentumgainasseveralcities
acrossthecountrywitnessedAirportupgradations,Metrobecomingoperational,several
expresswaysandroadwaysopenedforthepublicandsomuchmore.Outofthe98Smart
Citiesdeclared,60citieshavebeenalreadyfinalisedandtheyhavebegunthegroundworkfor
thesame.Thus,decisionsfortheinfrastructuraldevelopmentinthecountrywillallowthe
untappedrealestateregionstogrowverticallyin2017.Fortherealtysectortogrowand
contribute,itisimperativethatthegovernmentsupportsitdirectlyandindirectly.Through
thepassageofRERAandGST,wesawadirectsupportthatwillbeimmenselybeneficialin
thelongrun.Andwhileanalysingtheindirectcontributions;UnionBudgetwasverycrucial.
AnnouncementssuchasraisingtheHRAdeductionbyRs.36,000,increasingtheceilingon
taxrebatebyRs.3,000forpeopleearninglessthanRs.5lakhannually,DDTremovedfrom
REITs,atotalofRs.97,000croresannouncedforthedevelopmentofminorandmajor
roadways,developersnottoattractanytaxesonprofitsarisingoutofaffordablehousing
developmentsandmanyotherdecisions.Thesedecisionsaresuretobenefitthesector
indirectlyandwillpromotethegovernmentsplanofHousingforAll;whereprivate
developershavealreadybeguntocontributeheavily.Also,weareprojectingtheupcoming

RBIspolicyreviewandUnionBudgettobepopulist,andthiswillallowthissectorto
functionmoresmoothlyin2017,explainsDeepakKapoor,PresidentCREDAIWesternU.P.
&Director,GulshanHomz.
Speakingabout2016beingayearofkeydecisions,onejustcannotskipthedate8th
Novemberfromthepicture.Demonetisationcamedownasasurpriseforthecountryandreal
estatesectorwasnoexception.Stakeholdersofthesectorhavebeenjitterysincethenews
cameoutfirst.Fewthingshavebecomecertain,secondarymarkethascompletelydriedand
primarymarketnowlooksmoresecure,thusmakingthissectormovetowardsrefinement.
Thereareafewmisconceptionspertaininginthemarketduetodemonetisationsuchas
pricestofall,demandtoshatterandprojectdelaystobecomeprominent.Asamatteroffact,
realestatestakeholdersandbuyersshouldunderstandthatinthecurrentscenario,demandfor
goodqualitydevelopmentbyreputeddeveloperswithastrongdeliveryandfinancehistoryis
boundtoincrease.Itwasanticipatedthattheinvestorsmarketwillcometoahalt,dueto
whichpeopleareperceivingthemarketasgloomy.Inrealitythough,marketisperforming
absolutelynormal,asprimarysalesaretakingplaceatusualpace,whichinthelongrunwill
appreciatepropertyprices.Projectsshouldntgetdelayedasnotalltheworkrequireslabour
force,butmachinery,andhencesmartdevelopersaretacklingthesituationofcashcrunchby
changingthetypeofworktillliquiditystabilisesinthemarket.Finally,withRERAto
becomeoperationalinmoststatesbynextyearandeffectofdemonetisationmaking
transactionsdigital,wewillautomaticallyobserveamuchtransparentrealtysectorin2017,
aversKushagrAnsal,Director,AnsalHousing.
ALookatthePerformance
Performanceoftherealtysectorin2016wasamixedbag,whereprojectlaunchessawadip
byalmost6percentyearonyearwithNCRrealtymarketwitnessingthebiggestfall;but
possessionsofferedincreaseddrasticallybyastaggering15percent.Withthedomestic
demandnotbeinguptothemarkduetopricesstillbeingrelativelyhigher,unsoldinventory
pilingupandEMIsnotcomingdownproportionately,developersshiftedtheirfocustowards
deliveryofunitsandclearingofftheremainingstockratherthanlaunchingfreshunits.Over
thelastfewyears,especiallyfromyears20082012,massiveprojectlauncheshappened
acrossthecountry,thepossessionofwhichwasduebythisyearorthenext.Thiscoupled
withthesalesnotperforminguptothemark,developerswereprovokedtofocusonthe
deliverypart.WithRERAalsopassed,itwascrucialthatdevelopersstooduptotakethe
responsibilityofdeliveringontime.Thiscanberegardedasaboomforthesector,asmore
possessionsmeanbetterperformanceandstabilityinthesectorwhichfurtherattracts
potentialbuyers.Astheinventoriesgetclearedandpossessionstakeplace,saleswillpickup
paceandweareprojecting2017tobreakthethreeyearsalesdipjinxandoutperformseveral
goodyearsthissectorhasobservedinthepast,saysRakeshYadav,Chairman,Antriksh
India.
Amajorsaleschunkin2016camefromtheaffordablehousingsegment,wheredevelopers
acrossthecountryarefocusingtowardsthegovernmentsdecisionofHousingforall.NCR
realtymarketwasthetopperformerinofferingaffordablehousingunits,whereforinstance,
Gurugram(Gurgaon)isreadywithalmost50,000unitsinpipelinetobedeliveredby2021.
Movingslightlyuptheladder,eventhemidhousingsegmentperformedwellintermsof
salesandpossessionsboth,whereregionslikeNoida,GhaziabadandGreaterNoidascored
aboveothersinNCRrealestatemarket.Citingafewexamplesandtobeginwith;realty
major,ErosGroupachievedarevenueofINR700croresandmanagedtobagsalesof1,700
unitsin2016.NCRrealtymajorMahagunGroupscoredhighintermsofboth,salesand

possessions.Thecompanyofferedpossessionof4,587unitsandbagged9,462bookings
duringthecalendaryear.2016hasbeenastableyearintermsofrealtysectorsperformance
aspossessionsandsaleshappenedsilentlyanduniformlythroughout.Withbanksreducing
lendingrates,propertypricescomingdowntoitslowestanddevelopersfocusingupon
buildinganddeliveringbudgethouses,thedemandforsaleswaswellmet,consideringthe
slowdownpertaininginthesectorforpastfewyears.Possessionsontheotherhandsawa
majorthrustonaccountofRERAbeingpassedanddeliverybecomingtheprimemotiveof
everydeveloper.Nextyearmightturnouttobeevenbetterforthesectorastheupcoming
UnionBudgetisexpectedtooffermajorreliefforthebuyers.Eveninterestratesmightcome
downtoaslowas7percentthatwillallowthesalestomultiply.Withnumerousprojects
acrossthecountryreachingintotheadvancedstagesofconstructiontoday,possessionswill
yetagainbeahighlightfor2017,elucidatesDhirajJain,Director,MahagunGroup.Onthe
otherhand,AjnaraIndiaLtd.offeredpossessiontoabout2,000unitswithasplendidsales
numberof10,950unitsduring2016andaturnoverofoverINR353crores.Gettinghomes
deliveredontimeisthebestsightforanybuyerandthisallowsacompanytogenerate
credibilitywhichismosthelpfulduringslowdownslikenowdays.In2016,developershad
verythoughtfullyshiftedtheirgearsfromprojectlaunchestodeliveries.Thekindofpolicy
leveldecisionsandimplementationsthattookplacethisyearhasreshapedtheIndianrealty
sectorandassistedthedeveloperstofocusondelivering.2017looksallsettoofferwonders
tothestakeholdersofthissectorasmoredomesticandinternationaldemandisreadytocome
upbythemiddleofnextyear,withalleyesontheBudgetannouncements,wherechancesare
highofacommonmansbudget,sharesAshokGupta,CMD,AjnaraIndiaLtd.
Amongstotherstrongrunnersin2016wereNCRrealtymajorsGulshanHomzandRG
Group.GulshanHomzmanagedtoofferpossessionof373unitsthisyearalongwith493
unitssold.WithaturnoverofINR300croresapprox.and764unitssold,RGGrouphada
good2016andisforecastinganevenbetter2017fortheIndianrealtysectoringeneral.
RajeshGoyal,VicePresidentCREDAIWesternU.P.&MD,RGGroupcomments,Withall
theunnecessarynegativehypeabouttheslowdowninthesector;atamacrolevel,2016was
actuallymuchbetterthanmanyyearsbeforeit.Thisyearwesawarealtysectorfavoured
UnionBudgetwhichwaslaterwellcomplimentedbythepassageofRERAandGST.RBI
playeditspartseeminglywellbyreducingthereporateby50basispointsthisyear.Banks
alsogavesomecushionthisyearbyreducingtheinterestratesbyafractionmargintwicethis
year.Allthegainsfromthisyearwillbecarriedforwardto2017thatwillallowthesectorto
performevenbetter.
Whatsinstorefor2017
2016wasindeedayearofhappeningsespeciallyfortherealtysector.Thefocusnowmoves
to2017whereagainalotisexpectedoutofthegovernmenttooffersomereliefforthesector
anditsstakeholders.2017willbetheyearofimplementationanddigitisationfortherealty
sector.RERAandGSTonlysawtheirpassagein2016withjustahandfulofstatesdrafting
therulesforthesame.Butin2017,wewilldefinitelywitnessregulatorsinstatesandRERA
willbefullyfunctional.GSTwillcometoaconclusionbythirdquarterofthecalendaryear
andchancesarethatthissectormightfallinthethirdslab,i.e.18percent.GSTbecoming
operationalwillallowtherealtysectortobecomemuchrefinedandtransparent.Finally,with
thecountryplanningtobecomecashless,realtysectorandthegovernmentwilldefinitely
plantodigitisetheentiremechanism,fromfurnishingdetailstosalestopaymentsto
registrations.Wemightevenwitnessgovernmentsubsidiesorbenefitsifrealestatesalesand
registrationsgodigital,believesVikasBhasin,MD,SayaGroup.Addingfurther,Ashwani
Prakash,ExecutiveDirector,ParamountGroupsays,Unlikepreviousseveralyearswhere

realtysectorusedtogetcompletelyignored,2016gotprettymuchthebestoutofeverything.
Frominfrastructuretokeypolicydecisionstosomuchmore.Although,clarityover
acquisitionoflandandalongpendingdesireofentitlingthissectorwiththeindustrystatusis
stillpending.2017looksliketheyearwherethesedemandsofthesectormightbemetand
fewincometaxexemptionsorincentivesforthepeoplemightgetintroducedintheupcoming
Budgetsession.This,ifcoupledwithreducedinterestrates,willallowtherealtysectorto
functionfluentlyandperformevenbetterthan2016.
LookingintothecoreanglesofIndianrealestatesectorandanalysinghowthisyearwentand
whatsinstoreforthenextyear,KaushalNagpal,CoFounder,BookingKARconcludes,If
wesay2016wasasubduedyearforIndianrealty,mostamonguswouldagree.Wecould
hardlyseeanytractionduringNavratra&Diwali,whichisconsideredtobethemostpeak
timefortransactions.Whatevertransactionsingrouphousingsegmentwereseen,werefrom
theenduserslookingfortheirdreamhomes.Majorityofthemwerefromconsumerdurables,
PSU&ITsectors.Withtheexistingsentiments,2017looksnodifferent.Indianrealestate
marketisgoingthrougharoughpatchandtheonlyrespitecancomefromasharpdeclinein
interestrates.RERAwouldgraduallybuildconfidenceamongbuyers.Westronglyfeel,post
interestratecuttherewouldbeasubstantialdemandforresidentialgrouphousing.This
wouldactuallybeagoodtimeforenduserstochoosefromseveralreadytomoveinprojects,
astheywillsaveonthemoneyspenttowardsservicetax.Asperthedemandanalysisbynext
yearpostBudgetsession,eventhebrokerandconsultancyserviceswillmoveinthevertical
direction.