Day after RERA, realty stocks surge

Shares of realty and housing finance companies made smart gains by surging up to 9% on the day after the much-awaited Real Estate Regulation Act (RERA) came into force.

From the realty pack, Godrej Properties surged 8.86%, Sobha Ltd gained 6.48%, Indiabulls Real Estate soared 3.74%, Prestige Estates gained 2.33 % and DLF gained 1.80%on the BSE.

Led by gains in these stocks, the BSE realty index rose by 1.99 % to end at 1,962.13. Shares of Indiabulls Housing Finance jumped 5.45%, LIC Housing Finance gained 5.53% and HDFC went up by 2.99%.

“Implementation of RERA will bring financial discipline, transparency, accountability and compliance in the sector. It will improve perception of all stakeholders in the sector. It will lead to improved project efficiency and delivery.

“This, in turn, will lead to attract higher investment and PE funding for the projects. Buyers can expect protection against delay and fraudulent practices and transparency in sales based on carpet area,” said Ajay Jain, executive director of investment banking and additionally head of real estate group, Centrum Capital Ltd. The Real Estate (Regulation & Development) Act, 2016, which seeks to protect home buyers from unscrupulous developers, came into effect from Monday, 1 May. Cleared by Parliament last year, the new realty law would have one regulator in each state for the sector.

It has stringent provisions, including imprisonment for failing to comply with any of the directions of the Act. Only projects with all approvals in place can be sold to customers under the new law. Projects with plot size of a minimum 500 sq.mt. or eight apartments need to be registered with the regulatory authorities.