Face lift of Indian Real Estate- Vision 2018

Dr. Niranjan Hiranandani, Founder & CMD, Hiranandani Communities Headquartered in Mumbai, Hiranandani Communities is one of India’s most well-known real estate companies pioneering in the integrated township segment. It specializes in Residential, Commercial, Healthcare, Retail, Education, and many other verticals.

The Indian Economy and indeed, real estate have experienced a ‘Systems Reboot’. The new paradigm includes various encouraging initiatives by the Government, along with a new regulatory regime. This has completely changed the face of the Indian Real Estate sector. The positive effect is expected to become apparent in the upcoming years

Initiatives by the Indian Government have created the ideal foundation for real estate to look ahead at a positive future, with the promise of potential growth. The new regulatory regime is largely about steps, which include streamlining approval processes, simplifying taxation (GST), building institutional capacity, and also introducing urban planning and real estate-related reforms (RERA and REITs). The initiatives such as ‘100 Smart Cities’, the Delhi–Mumbai Industrial Corridor (DMIC) and Pradhan Mantri Awas Yojana (PMAY) offer the perfect platform which will create investment opportunities across projects, across the country. Transparency, financial discipline, and customer safety mechanism in place with reform-led policies will attract investment back to the sector.

As we enter 2018, the time is right for positives of the initiatives by the Indian Government as also the new regulatory regime to have their effect on Indian Real Estate, especially for the home buyer. I foresee 2018 as a year when Indian real estate will build a growth story based on the ideal foundation which has been created and look ahead at a positive future. For Indian real estate, 2018 comes with the promise of growth amidst home seekers getting their ‘dream homes’, while for investors, it should reflect enhanced attractiveness as an asset class.

The one change that we expect moving into 2018 is about the attractive investment options in Indian real estate:
no longer just from the residential segment, commercial spaces have come up as attractive alternatives. In terms of growth trends, if 2017 witnessed commercial real estate doing better than in the past, industry pundits suggest this positive will continue well into 2018 and beyond. These include retail, warehousing and logistics parks. Given that the new regulatory environment enhances safety and security for investors, the new investment options should create newer success stories in Indian real estate investments.

These are largely macro factors, but even at the individual investor level, the picture going into 2018 is just as positive. In a country where there are other asset classes that offer alternatives to investors, Real Estate is back to being a preferred option to grow wealth. The investor protection which the new regulatory regime offers has enhanced its attractiveness as an investment class. Real Estate, as an investment class, has always delivered consistent returns to investors, and has largely seen repeat investments by investors over the years. As we enter the 2018, I would position Indian real estate as the best asset to invest in, with better ROI in the long run.

The protection which buyers & investors will get in the new regulatory regime will enhance the Real Estate industry’s attractiveness as an investment class

If one looks at the Indian economy, real estate needs to learn from the aviation and telecom sectors, where enhanced availability of the product has a direct effect on the selling price. A surplus scenario as regards production and creation has the ability to bring down the cost, and fulfil the needs of everyone. The Prime Minister’s initiative, ‘Housing for All’ is a step in the same direction, and its successful implementation is imperative. In cities, we have seen mushrooming of unauthorized homes and in effect, across cities we find unauthorized development having mushroomed all over. This brings out the importance of development of peripheral towns and twin cities, as also the ‘100 Smart Cities’ initiative. The issue of ‘Housing For All’ is directly linked to growth of connectivity and infrastructure, and ‘Housing for All’ will flourish in such locations.

One aspect where 2018 will build on the growth trends of 2017 is Affordable Housing, which emerged as the driver of real estate growth through 2017. The Indian Government has given this segment initiatives and support, and we expect these to not just continue, but grow in 2018. Home Finance being at record low interest levels, has provided the extra ‘boost’ needed to ensure that a home seeker finding a ‘dream home’ becoming a reality, with a home loan – and this should continue in 2018 as well.

The Indian Real Estate sector, going into 2018, looks very bullish and I expect it to grow at a CAGR of 15 percent on a YoY basis. I foresee the dream of ‘Housing for All by 2022’ becoming a success with proper infrastructure and connectivity. Infrastructure will be the focal point of not just job creation, but also a high trajectory growth rate. Infrastructure growth will bring-in a radical shift and a paradigm change in the real estate scenario.

In a country where there are other asset classes that offer alternatives to investors, 2018 should see Real Estate being back as the preferred option to grow wealth. The protection which buyers and investors will get in the new regulatory regime will enhance its attractiveness as an investment class.