The focus at the convention was on the three tsunamis that have hit the
real estate sector in the past one year namely demonetization, RERA and GST.
Here are 5 takeaways from the convention.
Ashwini Priolker
CNBC-TV18
It was a buzzing morning at the 9th Annual National
Association of Realtors (NAR) - India convention in Mumbai. More than 1,200
realtors and developers across India were present, belying the general belief
that the residential real estate market is down in doldrums! The focus at the
convention was on the three tsunamis that have hit the real estate sector in
the past one year namely demonetization, RERA and GST. Here are 5 takeaways
from the convention.
1) RERA Harsh on Brokers: No surprise that the Real
Estate Regulatory Authority (RERA) was the main topic of discussion at the
conclave. The realty broker community did feel that the RERA rules were unfair
to them. "The penalty for the brokers and developers is the same. This is
too harsh especially when the broker manages to get only 2 percent commission.
Even the registration fee is very high", said Ravi Verma, Chairman NAR
India. This was countered by industry veteran Anuj Puri, Chairman, Anarock
Property Consultants, who has recently moved into residential business in
India. He felt that RERA has been able to weed out unscrupulous fly-by-night
brokers, leaving more room for serious professionals. “For the very first time
brokers have been recognized as an industry,” said, Puri.
2) Dilution of RERA Rules by States: Industry leaders
made no bones that RERA is simply not the last mile solution to all the
problems plaguing the sector. In a strongly worded statement Nirnajan
Hirnandani, MD, Hiranandani Group, said “RERA is a good law for all the future
projects. But the problem related to ongoing projects is deep rooted, like
cancer. These cannot be solved only with RERA. We need to find other solutions
like alternative funding mechanisms and these projects to be taken over to be
completed, with government intervention."
3) Impact of GST on Homebuyers: The implementation of
Goods and Services Tax has left Real Estate Industry with more questions than
answers. The tax neutrality of GST on prices of homes was challenged. “GST in
its current form cannot be tax neutral especially in bigger cities like Mumbai
where the prices are more than Rs 10,000 per sq ft,” says Boman Irani, Chairman
& CEO, Rustomjee Group. So, buyers will have to be prepared to shell out
more in bigger cities was the verdict.
4) Return of the Homebuyers: Despite several setbacks,
first-time home buyers seem to be coming back especially for well located, well
priced projects. According to the Anarock Chairman Anuj Puri, the sales in the
past six consecutive quarters have been more than the launches across India.
This clearly indicates that the launches have come down drastically, and unsold
inventory is steadily getting absorbed. On home prices correcting further, the
consensus was that most markets across India have already witnessed a 5-25
percent correction. The builders said the government was itself buying land at
way above the market price for infrastructure in different locations, leaving
little room for land prices to moderate. In fact, the circle rates do not even
allow for property prices to fall below a certain point, added the panelists.
5) Consolidation on Cards:
There was complete unanimity on the topic of consolidation. "Landowners
who earlier had ambitions of becoming developers cannot do so, after RERA and
now only the serious players will survive," added Kushroo Jijina, CEO,
Piramal Finance. PE investments in the realty sector have touched Rs 15,000
crore amount in first six months of 2017, and a large part of these inflows
have been to bail out cash strapped builders.
Credit : http://www.moneycontrol.com/
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