Real estate should be the preferred option to grow wealth in 2018

-    Dr Niranjan Hiranandani 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. And, 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, as also introducing urban planning and real estate-related reforms (RERA and REITs). 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 in India. 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 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 amid 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 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 that 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 the 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. In 2018, I would position Indian real estate as the best asset to invest in, with better RoI in the long run. 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 fulfill 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 unauthorised homes and in effect, across cities we find unauthorised 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. ‘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 government has given this segment initiatives and support, and we expect these to not just continue, but grow in 2018. The Indian Real Estate sector, going into 2018, looks bullish and I expect it to grow at a CAGR of 15 per cent, YoY basis. I foresee the dream of ‘Housing for All by 2022’ becoming a success with proper infrastructure and connectivity. Infrastructure will be a 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 the preferred option to grow wealth. The protection that buyers and investors will get in the new regulatory regime will enhance its attractiveness as an investment class. About the author: Dr Niranjan Hiranandani, Founder & Chairman & managing Director, Hiranandani Communities, is also the President (National), National Real Estate Development Council (NAREDCO), which works under the aegis of Ministry of Housing & Urban Poverty Alleviation, Government of India.