RERA, GST behind residential real estate demand pickup? Here are full details
A year after India’s real estate sector witnessed momentous and game changing regulatory reforms of Real Estate Regulatory Act (RERA) and Goods and Service Tax that altered the real estate landscape, the first green shoots of recovery are emerging on the horizon.
A year after India’s real estate sector witnessed momentous and game changing regulatory reforms of Real Estate Regulatory Act (RERA) and Goods and Service Tax that altered the real estate landscape, the first green shoots of recovery are emerging on the horizon. While the residential sector witnessed significant impact of these reforms, there is strong growth momentum visible.
According to JLL data for the nine-month period ended September 30, sales in residential segment have risen 40% on year. Compared to the year ago period, new launches during January to September 2018 registered a robust 75% growth. The data is based on performance of residential segment in seven key markets of National Capital Region, Mumbai, Bengaluru, Chennai, Pune, Hyderabad and Kolkata.
From the sales perspective, Hyderabad and Kolkata were the standout performers with growth rates of 277% and 230% respectively. An important factor behind the high sales growth numbers was the low base effect on the back of relatively small size of the residential market in both these markets.
These were closely followed by Chennai (77%), NCR (53%), Pune (19%), and Bangalore (12%). In terms of launches, Kolkata led the way with an astounding 325% on year growth followed by Chennai (289%) and NCR (152%) rounding off the top three. While Bengaluru and Hyderabad recorded growth rates of 101% and 82% respectively, Pune had a mere 3% growth.
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The residential market in Mumbai (that includes Mumbai city, Thane and Navi Mumbai) too witnessed strong growth momentum in the first nine months of this year. The city recorded 22% growth in the number of launches and 13% rise in sales, which is quite promising for the city considering the high capital values.
While the implementation of GST and RERA led to some initial challenges for developers, most of the issues have been addressed and the industry as whole is aligned. Going by the data for sales and new launches in the January to September period, home buyers are no longer delaying or postponing their decisions on buying homes.
With developers, consumers and other important stakeholders in the sector having accepted realities of doing business of post GST and RERA, there is definitely an increase in confidence in the market amidst positive signs of recovery. This coupled with stable pricing augurs well for the industry and demonstrates the return of buyers’ confidence in the market, which has in turn prompted developers to launch new projects. Going forward, we will have to wait and watch on how this growth trend will crystallize in the future, but it is definitely the start of a positive growth story in the mid to long-term for the Indian residential sector.
CEO and Country Head, JLL India