Indian real estate market has seen radical changes in the last one year owing to the laws and regulations that have been enforced. The government has taken various initiatives to make residential property favourable for buyers. The policies implemented have made real estate a more profitable investment option not just for homebuyers but also for potential investors looking to purchase land for the sole purpose of making investments. Indian real estate is looking like a promising bet.
The first quarter of 2017 saw a 70% jump in the residential supply in the Indian real estate market. More than 30,000 units were launched in the first quarter of 2017, which is pretty high as compared to the 18,000 units launched in the last quarter of 2016. In fact, investors have favoured the residential sector. The Indian housing sale has also increased by 70% in the Q1 of 2017 as compared to the Q4 of 2016. Both the primary and secondary markets for residential property in Indian real estate have seen a positive shift in the first half of the year.
Various government initiatives that has made residential sector more appealing than commercial sector:
- Real Estate (Regulations and Development) Act: The Real Estate (Regulations and Development) Act a.k.a RERA has been enforced in India in May 2017 and is one of the main reasons why people are showing more interest in investing their money in the residential real estate. Buyers are getting empowered and can now file a complaint, know the status of projects, and compare the builders easily on the state regulatory authority website through this act.
- Goods and Services Tax: Another reason that has made investing in residential real estate more lucrative is the Goods and Services Tax that has been enforced in India in July 2017. GST would bring more transparency in the taxation system and has even lowered the tax rate on various types of residential projects. The benefit with this lowered and transparent taxation would be passed on to the homebuyers as well.
- Pradhan Mantri Awas Yojana: The Pradhan Mantri Awas Yojana is an initiative by the PM Narendra Modi-led government to provide affordable housing facilities and to provide housing to all by the end of 2022. As a part of this scheme, the interest rate has been reduced and subsidies have been offered on the purchase of residential real estate which is attracting people towards this sector.
- Demonetization: The revolutionary demonetization move by PM Narendra Modi that startled the public in November 2016 is also a major reason why more white and transparent investment in the residential real estate would be seen. As a long term effect of the demonetization move, the prices of real estate have decreased and would bring higher returns in the future.
Further, the rental income that comes with residential property is an add-on bonus. The EMIs on the property cab be set off against rental income. All in all, investing in residential property is sure to get you higher returns because of the increasing demand in this sector.
ANP Atelier & Associates