Mumbai: New residential launches in the top seven cities in India are likely to remain subdued in the first half of this year due to the implementation of the new real estate regulations even as housing sales have slowly recovered from the impact of demonetisation in the first quarter of the year, said a report by global property advisory firm CBRE.

Despite the short term impacts of demonetisation and the new real estate law which will come into effect from May 1, there is a growing interest from large sovereign and foreign institutional funds as they expect the regulatory reforms would bring transparency and credibility into the sector, said CBRE’s Asia Pacific Real Estate Market Outlook report released on Thursday.

As per the report, investment into the Indian real estate market would touch $7 billion by 2017 end, up from $6billion last year. It will further push to $10 billion in the next three years, it said.

After a sharp fall in both supply and demand in the fourth quarter of last year as a result of the demonetisation drive, housing sales and new launches shot up by 70% in the first three months of the year as compared to the previous quarter, the report showed. While new launches stood at 30,000 units, housing sales also jumped to 23,000 units in the January to March period from just about 14,000 in the previous quarter.

Last year, housing sales and new project launches were down by 18% and 22 % respectively, the report said.

“Housing supply in India during the first half of 2017 is expected to rationalize on account of cautious developer sentiment; largely due to the demonetisation drive and anticipated implementation of Real Estate (Regulation and Development) Act," the report said.

Anshuman Magazine, chairman (India and South East Asia), CBRE, said the immediate impact of the new Act would be that there could be slowdown in the project launches till the time developers get the hang of the new regulations. “However, the impact would not be drastic. The new law would only benefit in the long run as it would improve both consumer and investor confidence," he said.