Owning a home in one’s name is a dream that many have. This dream is getting manifested into reality as more and more people are investing in residential properties. While it is commonplace for investors and buyers to look for residential spaces, the trend is back in focus as the figures are heartening.
In the first half of 2017, 56 per cent of investments were in the residential real estate segment. The overall investments amounted to Rs 9,000, a number which is two times that of commercial and office spaces. Both equity and debt formed a major part of the investments from foreign and domestic contours. Experts suggest various reasons for the staggering numbers in residential real estate. While a large part of the applause comes from the Government’s long-term reforms, a growing number of key short-term measures have also contributed to the figures.
Owing to the introduction of the Real Estate Regulatory Act (RERA) and Goods and Services Tax (GST) and the consumer confidence in residential real estate has shown marked improvements. Transparency, accountability and clarity have led to the investors showing more favour towards residential properties. Added to it, the Benami Property Act and demonetisation of Rs 500 and Rs 1,000 notes to curb black money, a common practice in the industry, has had a major impact on the buying patterns of investors. Experts say that the office segment registered a lower growth compared to the same period a year ago, whereas the residential space has managed to garner more interest which has converted to sales owing to such policy reforms.
The push towards affordable housing and the desirability of middle classes to own high-end homes has led a lot of investment in the sector. Picture this: Lodha Developers received a loan of Rs 1,800 from Piramal Fund Management which is marked as one of the biggest investment decisions. For a township project in Gurgaon, Sare Homes got Rs 435 crore from KKR and Altico Capital.
The change in repo rate of Reserve Bank of India is also seen as a positive step in attracting more homebuyers. With many launches of housing projects in the pipeline, such measures will boost the purchasing capacity of buyers.
As the most important investment asset, real estate determines the country’s development and growth in the long run. While office spaces do not have a continuous demand and one or two transactions give skewed numbers, residential spaces have and will continue to gather more traction when it comes to equity deals, say experts.
It is also to be noted that global investors are also looking at India’s real estate owing to reforms like GST and a stable government which is making inroads into the global economic matters and becoming a leader capable enough to dictate terms at the world stage. Domestic investors are also showing promise owing to the setting up of Real Estate Investments Trusts (REITs), concentration on affordable housing and reforms like RERA. The trend is likely to grow with further reforms focussing on factors clean books, more answerability and doing away with red tape and delays.