RESEARCH
INDIA REAL ESTATE RESIDENTIAL AND OFFICE - JULY - DECEMBER 2016 TABLE OF CONTENTS
06 INDIA 16 AHMEDABAD 26 BENGALURU 46 CHENNAI 66 HYDERABAD 84 KOLKATA 96 MUMBAI 114 NCR 132 PUNE From the Chairman’s Desk For the office segment, further In the first half of 2017, the sector is RERA & GST, medium term impact clarification on REITs is a positive step expected to be largely muted and of demonetisation and listing of and is likely to give a greater impetus to there would be pressure on prices. REIT. During this phase, enterprises WEATHERING THE STORM - the commercial market. With consumers in a wait and watch are expected to streamline their mode, demand could be subdued business processes and implement GLOBAL DISRUPTIONS due to a mind-set that property prices international best practices to adhere AS REALTY REELS THROUGH On the global front, some uncertainty could undergo reduction along with to the upcoming changed business will prevail till the US President elect a substantial lowering of home loan environment. There will be a greater DISRUPTIONS, LONG-TERM formalises his policies. There will be a interest rates. Likewise, tax benefits in influence of FDI (Foreign Direct Shishir Baijal fundamental impact on the commercial the forthcoming budget will be another Investment) that will help create jobs realty market as it is heavily dependent Chairman and factor that could hold back demand for and revitalise growth within the sector. Managing Director BUOYANCY STILL INTACT on US outsourcing especially by the property in the initial quarters of 2017. Overall, institutional participation—both technology companies. Since buying a house is a discretionary domestic and global markets—will help Traditionally, the United States has need –a need that can be postponed, it the sector in getting high quantum is anybody’s guess that the real estate of funds at competitive rates. In view here is never a dull moment Just when the industry was gearing Indian economy with the real estate been one of the biggest investors sector will be the slowest to recover of the various procedural changes in real estate. 2016 began up to meet the deadlines set by sector being at the receiving end due in India with several manufacturing, from the impact of demonetisation vis- adopted by the government, it is also promisingly in comparison to the government for Real Estate to this move. technology and outsourcing hubs T à-vis other sectors. expected to be an important facilitator 2015; however as things stand, the Regulation & Development Act 2016 here. The technology sector has Another imminent change that will in bringing back stability within the real year isn’t expected to end on a healthy (RERA) and Goods and Services Tax an undeviating connection with the The office market is expected to face impact the sector is the partial estate sector. note. A major factor for this could be (GST), it received a jolt in the form country’s residential demand and any challenges to maintain the prevailing implementation of RERA. The Act attributed to the policy developments of demonetisation of the ` 500 and change in the US outsourcing policy pace in the following year. This could Going by the turn of events, it is lays down the broad parameters for by the government which in the short 1000 currency notes with immediate could have similar appalling effects be due to shortage of ‘A’ Grade difficult to crystal gaze into 2017. functioning of the real estate sector term have led to an unpredictable effect. While the broad motive of on India’s real estate domain. We office space, the geo-political risk of However, implementations of RERA and since land is a State subject, disruption but in the long run are the Government of India behind this need to wait until the new government a probable reduction in outsourcing & GST, lower home loan interest rate the Act required States and Union projected to augur well for the industry announcement was to curb the menace formalises its policies on various issues from the US, structural changes in regime and fiscal benefits for taxpayers Territories to come up with governing as a whole. On the global front, of fake currency notes and abolishing including outsourcing, to understand domestic economy and top technology in the Union Budget will infuse the rules by 31st October 2016. RERA, developments like Brexit and the US unaccounted money, the impact which way the wind blows particularly companies reducing their growth “feel good factor” which is extremely once implemented, will increase President elect are expected to have of this move could be felt across for India. targets. However, with the advent important for the revival of the industry. transparency, which in turn will bring their bearing on the Indian real estate economy and sectors including real of GST, the warehousing sector will The Prime Minister has already back buyer confidence. The real Earlier this year the UK voted in favour sector. The writing’s clearly on the wall estate. This move created a real dent see a consolidation thereby bringing announced a New Year’s gift to home benefits would be that the buyer will of Brexit, the unexpected outcome - 2016 will go down as a watershed in the residential real estate sector, efficiency in the entire system. buyers in the budget segment (both be ensured of a dedicated governing left the industry perplexed –a vote year in the history of Indian real estate. pulling back the last quarter trend of in rural and urban areas) in the form body, timely project completion, that translates into a complete shift By May 2017, RERA will be residential sales substantially across of interest subvention for home loans 2016 – WHERE WE STAND complete information on the project of business policies to be adopted implemented in the country. The after the cities; consequently sales are at a which will go a long way to realise the and amenities promised. Developers by the industry. The EU is a rather effects of demonetisation coupled The residential property market historical low and we expect 2016 to be government’s dream of ‘Housing for All as well as intermediaries will have to protectionist market and several Indian with legislations like the GST bill and witnessed improved sales in the first worse than 2015, which was one of the by 2022’. A lot of churning will happen recalibrate the way they do business business entities choose to invest in Benami Transactions (Prohibition) six months of 2016. Barring Delhi-NCR, worst years itself. in 2017 because of the implementation to be RERA compliant. However, as of the UK, with a view to get unrestricted Amendment Act, 2016, will further other markets did well in the first half of various policy changes and it is Interestingly, the office market date, only Maharashtra and Delhi have access to the European markets. The increase transparency and reliability of this year as compared to previous important to see how developers continues to do well in 2016 and the come up with and notified the draft scale of this effect, especially in the within the sector. Furthermore, this will years. Mumbai and Bengaluru led the recalibrate their businesses to the overall transaction volume by the year rules for their respective States. medium to long-term, will depend on also see a boost in institutional funds way and the manner in which markets changing environment and whether end will be at par with the 2015. the outcome of negotiations on the flowing into the sector at competitive responded in the initial phase of 2016 The enforcement of the Benami buyers capitalise the opportunity of the UK’s exit. rates which will enable the sector to gave us the feeling that the year would THE GAME CHANGERS Transactions (Prohibition) Amendment various reforms and change their status come out of the woods. end on a high note for the residential Act, 2016 will also prove to be yet OUTLOOK 2017 quo position of “wait and watch”. While most of us awaited the results property sector. The overall positive another disruption in 2017. IN A NUTSHELL of the US presidential elections on 8th All of the above mentioned factors The end of 2017 is most likely to sentiment was attributed to a host November 2016, the Prime Minister The above factors may have briefly put together point towards a subdued To conclude, the impact of see the initiation of a robust and of factors including political stability, of India brought about the most halted the march, especially of the beginning for 2017. With enquiries, demonetisation is a transient one and sustainable growth trajectory for regulatory environment, enhanced sweeping change in recent history by residential property market but in the walk-ins and sales drying up as a fall- the economy will undergo structural India’s real estate industry and will be infrastructure, strong investments, demonetising the ` 500 and 1000 notes long run they will help the sector grow out of demonetisation, the first two changes for the first three quarters recognised as the base for the future approval to the GST bill, and which was a rude awakening for the in a much more evolved manner. quarters of the coming year will result of 2017. The industry awaits the growth of this sector. amendments to REITs. in a substantial slow-down in sales. implementation of policy reforms like Hetal Bachkaniwala Vice President Research
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