‘Budget will focus on affordable housing’

The real-estate sector has witnessed a number of policy changes over the last few years.

In 2014, the focus was on increasing capital, with introduction of real-estate investment trusts (REIT) and amendments to the Foreign Direct Investment Policy, allowing 100% through the construction route.

In 2015, it was urban development and the housing agenda, with the introduction of the Smart Cities Mission and PMAY, with the aim to build 20 million affordable homes by 2022.

In 2016, the thrust was on increased transparency and reduced prevalence of the shadow economy, with amendments to the Benami Transactions Act and demonetisation .

Lastly, 2017 saw the sector undergo a complete overhaul, with the introduction of RERA and GST, and the infrastructure status to affordable housing.

For real-estate companies across segments, 2017 has been particularly transformative. The seemingly outmoded operating framework was banished, making way for a new regime.

Companies had to gear up to change their working models, organisation structures, understand how to get their vendors to comply, ensure their employees were trained, appease their customers who now had a lot of protection under the Act, while still running successful businesses.

Looking ahead, the sector metamorphosis into a tightly controlled and regulated industry will see companies looking inwards to build enhanced delivery capabilities, while keeping a keen eye on newer business models that emerge, and their own five-year vision.

Businesses will focus on using newer technologies at the site and planning level, employing effective cash flow management techniques, get better at project management and quality control, and take a more structured approach to development, much like their global counterparts.

At the market level, the new operating framework is expected to lure wary consumers back into the system.

Recent reports from Anarock have indicated that 160,000 units were sold from Q1-Q3 2017 and unit sales exceeded new launches. The trend of limited new launches and disposing excess inventory will continue through 2018, where a marginal sales recovery is expected in the residential market. It continues to be a buyers’ market. For those struggling to sell, innovative leasing models might help meet some cash flow requirements in the interim.

The ‘Housing for All’ agenda supported by the National Housing Bank’s (NHB) initiatives such as Credit Linked Subsidy Scheme, to include a larger portion of home-buying segments, has encouraged additional purchasers and fence sitters.

Declining interest rates have also contributed to improved sentiment. Affordable housing will continue to be the focus of policy and industry over the next few years, as that is where the real housing shortfall and housing need exists.

In the commercial market, business models such as co-working spaces will see continued interest.

Companies will start getting more sophisticated about their leasing arrangements and strategies to attract the right tenant mix, which will be a key differentiator.

Logistics, warehousing, student housing, co-sharing, senior living and leasing will be additional business models that real estate companies will explore as the market dynamic continues to evolve.

With increased transparency, accountability and the policy thrust towards infrastructure, urban development and affordable housing, 2018 should see renewed interest from investors and consumers alike.