India will be celebrating 72 years of Independence this year and with real estate being one of the major contributors to economy, we reflect some major real estate milestones post Independence.
The Maharashtra Regional and Town Planning Act, 1966
The Maharashtra Regional and Town Planning Act, 1966, laid the foundation of real estate by incorporating the very first practice of development plans and town planning. The Planning Commission also issued its first guidelines for district planning in 1969, which further formulated district plans for many states.
The initiation of real estate movement
The government initiated conceptualizing the Housing and Urban Development Company in 1970 followed by City and Industrial Development Corporation in 1971. Further government set up the Mumbai Metropolitan Region Development Authority in 1975, followed by National Housing Bank in 1988 and the Housing Development Finance Corporation in 1994. The establishments helped build and strengthen the residential real estate industry in India.
The modernization of real estate
The liberalization of economy in 1991 had set in motion for modernization process and brought a new type of demand – contemporary, world-class office spaces. The scenario had created latest job opportunities and gave consumers a big market to access products and services for the first time. The scenario led to the entry of multi-national corporations into India in a big way.
Commercialization of real estate
Commercialization of spaces above transit routes was introduced first in Vashi railway station in 1992. Other Navi Mumbai stations, such as Sanpada, Juinagar, Nerul and CBD Belapur on the same railway line followed the steps but were not able to achieve success similar to the one achieved in Vashi. Nevertheless, the makeover of Seawoods-Darave railway station witnessed phenomenal success.
The beginning of Transition in real estate
Foreign direct investment (FDI) in real estate was first allowed in the year 2005. The implementation had opened up funding gateways and allowed maturing of the real estate industry. The FDI was further liberalised over the years, paving way to record private equity inflows and entry of foreign developers.
Currency demonetization affected real estate industry in 2016, December and slowed the sales in real estate because the sector was hugely cash based traction led.
The Real Estate (Regulation and Development) Act (RERA), aimed at protecting home buyers, came into effect from May 1, 2017. It has made builders more focused on the project in terms of execution. In addition, we also see increasing number of private equity players in the market. RERA was a game-changer, as only reputable and competent builders will remain in the fray post its implication.
The Goods and Services Tax (GST), a revolutionary tax reform which was rolled out in July 2017, has efficiently replaced the previous multiple taxes like VAT, central excise duty, commercial tax, service tax, octroi, etc. Homebuyers in the affordable housing segment - specifically homes of up to 60 sq. m carpet area in size - have benefited significantly from the reduction of GST by 4% (from 12% to 8%)
PMAY scheme and the subsidized CLSS for homebuyers gave a boost to affordable housing segment introduced recently. Revised carpet area of residential units for interest subsidy under CLSS is a welcome and practical move by the government for both homebuyers and real estate developers. This will allow home buyers from MIG (Mid Income Group) to have increased subsidy in home loans which will strengthen their home buying decision. On the other hand, real estate developers who had been facing problem of unsold inventories will be able to drive increased sales which will also address the predicament of urban housing shortage. The move is in sync with the revised loan limits by RBI for affordable housing transcending increased sales in the sector. We have seen growing demand for housing from mid-income groups, which remain the largest segment by far specially in metros such as Mumbai.
Bigger homes combined with affordability are a growing trend in real estate sector from consumer’s standpoint. From a real estate developer’s perspective, the current circumstance is the ideal state to plan and action upon the constructing affordable housing. Real estate developers need to change their approach and adopt smarter strategies to tap this opportunity. The best way to capitalize the situation is by adopting and enhancing the concept of ‘Space rationalisation’.
Source : 99acres