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Will the RERA, GST and REITs reforms bring out the desired impact for real estate in 2019?

December 2018
2017 was a bad year for Indian realty. Launches dulled as the industry reeled under the impact of demonetisation and the newly introduced Real Estate (Regulation and Development) Act (RERA) and Goods and Service Tax (GST).

"In 2017, developers were in the process of recalibrating their business model to align themselves with the industry scenario post the implementation of RERA and GST," observes Samantak Das, National Director and Chief Economist, Research and REIS, JLL India.

Fastforward to 2018. The dust around RERA showed signs of settling.

"In 2018, we saw the teething problems of RERA and GST fast settling and substantial growth in new launches," adds Das. Post RERA, some developers opted not to do it alone. Others kept an eye on existing project deadlines.

"We have seen a surge in the number of JVs and developments post RERA," notes Joe Verghese, Managing Director, Colliers International India. "Overall, there was also a renewed focus on project completion."

So much for the supply of property. What about demand?
"Sales in the first nine months have shown positive growth in the top seven cities," says Das.
Between January and September 2018, 36.4 million sq ft of commercial real estate was absorbed in the major seven cities, about 26 per cent higher than the previous year, says Verghese.
"Grade-A office buildings have had a good run in 2018 because there is a dearth of supply and huge demand for that category," observes Anuj Puri, Chairman, Anarock Property Consultants.
"Industrial property did reasonably on account of several beneficial policies.
Hospitality did not exactly thrive but did not lose much ground either, but residential property certainly did not see any convincing revival in 2018," adds Puri.

Outlook for 2019
Warehousing may see a lot of action in 2019. "With logistics being granted infrastructure status in November 2017 and e-commerce strengthening, the logistics and warehousing segment is expected to witness significant growth," says Anshuman Magazine, Chairman, India and South-East Asia, CBRE.

In the commercial realty segment, Arvind Nandan, Executive Director, Research, Knight Frank India, expects co-working spaces to become a serious consideration among large corporate occupiers and greenfield investments in commercial real estate to gain strength next year.

Turn to the residential space, and Magazine expects affordable housing to be the key driver in 2019. "Conferring infrastructure status to affordable housing and announcing various tax incentives will attract more prominent developers," he says.

Residential property developers are hoping for more supportive government policies and benefits to encourage home purchases as well as boost project development, says Puri. The government may please take note.

- CHARU BAHRI

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