The real estate sector may witness favorable tidings in 2018 on account of major policies implemented by the Central Government including GST and RERA. Real estate markets witnessed major changes in 2017 and there has been an effort to usher in greater transparency into the sector. RERA came into effect from the 1st of May, 2017. RERA has scaled up overall accountability of real estate developers and also safeguards the interests of homebuyers. Real estate developers need to register their properties under RERA and this is expected to facilitate REITs (real estate investment trusts).
GST is a substitute for multiple taxation levels. The construction of any building either partially or totally will come with 12% as taxes and there will be full ITC (input tax credit). Residential construction will attract 12% of GST as a result and this will be applicable for real estate developers who sell their units prior to construction completion. Demonetization has also benefited the Indian real estate sector from a long-term perspective. The Central Government’s demonetization drive has majorly impacted transactions in the secondary market although primary sales were also affected to some extent. The demonetization move also impacted land deals and luxury property sales. 2017, however, witnessed an improvement in buyer sentiments due to these reforms.
2018 should see the realty sector doing pretty well due to all these reforms undertaken by the Indian Government. With completion of projects that are currently on-going real estate developers should play a part in increasing overall supply in 2018. There may be a rationalization of the GST rates to 6% from 12% and if that happens, it will give a further impetus to the sector as well. Stamp duty may also be merged under GST as per reports. Real estate is also hoping to get infrastructure status which will help it in obtaining funds at more reasonable rates of interest as well.
Major land acquisition reforms may also be undertaken in 2018 according to the latest reports. These will open up the market for affordable housing even more. The Government may consider reducing the land rates in several clusters which will enable developers to launch new affordable housing projects and quickly deliver the same to buyers. All in all, 2018 promises to be a promising year for the Indian real estate industry by all means.
