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Business News/ Money / Personal-finance/  Expert speak: Will changes in 2016 help real estate?
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Expert speak: Will changes in 2016 help real estate?

The real estate market, which has been under pressure for the past few years, was affected by many policy changes in 2016

From left to right: Anshuman Magazine, Tejas Patil, Amit Oberoi and Jehangir GaiPremium
From left to right: Anshuman Magazine, Tejas Patil, Amit Oberoi and Jehangir Gai

The real estate market, which has been under pressure for the past few years, was affected by many policy changes in 2016, the most important of which are demonetization, and the real estate and benami Acts. Here’s what experts have to say on the impact of these regulatory moves.

ANSHUMAN MAGAZINE
Chairman, CBRE India & South East Asia

India is one of the fastest growing economies in the world and real estate has been one of the thriving sectors. Steps taken by the government—from the Real Estate (Regulation and Development) Act (RERA) and the goods and services tax (GST), to Real Estate Investment Trusts (REITs) and the demonetization drive—are all aimed at bringing transparency into the sector and boosting the confidence of consumers, developers and investors. The residential market in India has been shifting from a pure, price play mechanism towards a market that is driven by commitment to delivery, quality and right pricing strategies.

These initiatives will encourage the return of positive sentiment among home buyers who had earlier been hesitant.

We anticipate developers to channel their focus on the timely delivery of ongoing projects and to remain increasingly flexible on pricing and payment structures.

Further, efforts by the government to formalize the real estate sector in recent years are indicators of the potential of the real estate market in the country.

These steps will help resuscitate buyer confidence in the sector, especially residential real estate.

TEJAS PATIL
Head-real estate services, Sanctum Wealth Management

Unaccounted and surplus monies have always found a way into real estate. It acted as sustenance for developers faring poorly in project execution and getting away with misdeeds.

With RERA and the benami Act, a genuine attempt has been made to institutionalize and strengthen the entire real estate framework. These Acts will be strong deterrents to corrupt officials facilitating and participating in benami transactions. The need of the hour is strong supportive laws and strict organisational framework, corroborated by the regulatory authorities themselves.

Demonetization will only add to the difficulties of those resorting to benami transactions. Benami property sellers as well as purchasers have been hit since the move.

RERA, the benami Act and demonetization will aid the rise of faith over a period in the system, which is marred by negativities.

More real users will step in once they positively perceive the rationalization in the sector, by virtue of the increased transparency and plugging of loop holes for the developers.

Eventually an end user or home buyer will benefit from true and real pricing of projects that will complete on time.

AMIT OBEROI
national director, knowledge systems at Colliers International India

We believe RERA is the most likely to earn back the home buyer’s trust. It will lead to greater disclosures on projects and informed decisions by buyers.

Even brokers will need to register to sell residential units. While state governments have diluted the state-level RERA, we believe that states do not have the right to draft rules in contravention to a ‘central Act’. We can expect a rollback or review of many of these non-conforming rules.

It is too early to predict the impact of demonetization. The efficacy of this regulation lies in the government ensuring that going forward, black money is not generated or consumed in the sector. One way to do so is to align government benchmarks or circle rates with current market rates, and reduce stamp duty.

We hope that these moves align India with international standards of compliance to norms and bring greater transparency to the real estate industry.

Residential sales have sharply declined. With RERA, expect developers to hold back new launches to see how authorities implement the Act. So for a short period, expect low sales and low new inventory. Sales should start picking up in 3-4 months.

JEHANGIR GAI
A Mumbai-based consumer activist

Demonetization has resulted in attempted money laundering by the rich and the powerful. There has been news of agents getting stashed old currency exchanged for new currency, for a commission on a percentage basis. So the impact of demonetization on the rich is debatable.

Corruption is so rampant in our country that approvals for plans and construction are not granted unless bribes are paid to officials. This is only possible through unaccounted black money, which the builder collects as a cash component from prospective home buyers.

Besides, many builders have suffered losses due to demonetization, but greed knows no bounds, and these builders want to make up for the losses suffered. Hence, except for a temporary setback, the situation remains unaltered.

RERA has not made any difference, as it is yet to be implemented.

The procedure for grievance redressal in it is more cumbersome, costly and time consuming as compared to the Consumer Protection Act.

The benami Act was already in force. There is nothing new except for the appointment of the enforcement authority and more stringent punishment.

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Published: 27 Dec 2016, 11:37 AM IST
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