Real estate is one of the most promising sectors to invest globally. In India, the real estate sector is the second largest employer after agriculture and is projected to grow at a rate of 30 percent over the next decade. 2017 witnessed India’s real estate sector going on a bit of a roller coaster ride because of demonetization and the implementation of policies like RERA and GST. But things are likely to stabilize this year, with rising purchasing power, rapid urbanization, the government’s intervention to provide easy loans, etc. Here are some reasons why you should never delay a property investment in 2018.
Rebuilding the business model
The recently implemented RERA, GST and Benami Property Act have enforced transparency and accountability which have boosted consumer confidence to a large extent. Homebuyers and investors are now well aware of their rights. Developers will start focusing their energy on consumer satisfaction instead of just the finished product. Timely delivery of ongoing projects will be prioritised, and developers will most likely be more flexible regarding pricing and payment structures.
More capital flow from FDI
A report by the United Nations Conference for Trade and Development stated that India ranked 4th in terms of FDI inflow. In 2016, FDI in India’s real estate market was US$ 34 million and this number is expected to have significantly increased since then. The launch of REITs (Real Estate Investment Trusts) adds more transparency to real estate transactions. Because of this, the India real estate market can expect a higher inflow of capital from global investors and NRIs looking to invest in Indian real estate.
Luxury housing has received all the limelight in the Indian real estate market. Come 2018, however, affordable housing will take centre-stage driven by government initiatives like the Pradhan Mantri Awas Yojana and the Housing For All agenda. Private companies and developers will focus their attention on more affordable housing projects (as previously compared to luxury and mid-segment housing) to meet their set targets.
Growth of Tier II cities
With an increase in salaries, employees now have their own vehicles. More job opportunities have resulted in rapid urbanisation and even migrant workers are paid a higher compensation than before. All these factors have led to increasing congestion in major cities which has forced several businesses to consider moving their operations and/or working out of Tier II cities. This creates a demand for commercial prospects in such cities, no doubt leading to their growth.
Increase in hybrid spaces
Apart from residential real estate, the commercial segment will also witness massive growth. With the fast and ever-evolving work culture in India, regular office spaces will give way to more hybrid or co-working spaces. This, of course, is the result of India’s booming startup culture. Indian metro cities have been seeing a quick growth in co-working spaces. Going forward, this trend will slowly but steadily spread to Tier II and other cities. Developers and co-working operators will work in tandem, which will significantly benefit the real estate sector. This will create an upward tangent in cost-efficiency, productivity and employee retention.
Consolidations and joint ventures
One of the most significant reforms of recent times, RERA (Real Estate Regulation Act), will change the Indian real estate market. The act was passed to improve transparency and to make the sector more investor-friendly. Developers can no longer be lax when it comes to project completion, disclosure of all project-related information, changes in project plans without the knowledge of the buyer, etc. With RERA, developers who have been negatively affected by it will want to improve their credibility. This will most likely be done via consolidations and joint ventures with prominent players.
Growth of niche segments
Market analysts opine that apart from affordable housing, developers will also turn their focus towards niche segments like plotted developments, residential townships, commercial spaces, etc. As a result, consumers will be able to enjoy more choice when looking for properties to purchase.
Ease in the office sector
REITs will enable significant growth in India’s real estate market, particularly in the commercial sector. For a long time, India’s office space sector received most of its funding from private equity funds. 2018, however, will see more and more office spaces in India becoming REIT compliant. This will, in turn, attract smaller investors who would prefer to invest their money in return for regular dividends at a relatively lower risk.
Despite the several myths surrounding the Indian real estate market, this sector continues to be a tried and tested means of building one’s wealth and cash flow. The newly-introduced government reforms may have shocked the market initially, but long-term gains will continue to pour in. If you’re a first-time homebuyer, 2018 is poised to be a good year to invest in the Indian real estate market. Visit Lancor today to find and invest in your dream home.