Karan Sehgal
The phase between November 2016 and March 2018 was one of the toughest for the real-estate sector over the years. The slowdown started with demonetisation, which was followed by the roll-out of Goods-and-Services-Tax (GST) and the implementation of Real Estate Regulation and Development Act (RERA).
Changes like GST and RERA were so monumental that it was expected that builders and even consumers would take some time before settling down with the impact of the new policy announcements. As expected, the developers have finally adjusted with GST and RERA to a large extent.
In the last 3-4 months, the real-estate sector has posed some sort of recovery. However, the revival is limited to few big builders, as most small builders are still struggling with slowdown.
Rohit Gera, managing director, Gera Developments said, “It’s absolutely correct to say that some builders are struggling while some other developers are doing well. Due to RERA, there’s a flight of buyers towards quality developers. Builders, who were well capitalized, well funded and who also had work going on at their construction sites have had no problems.”
Gera launched an ambitious child-centric home project called ‘River of Joy’ at Kadamba Plateau just few months back. Alongwith ‘Adora de Goa’ near Dabolim by Puravankara, River of Joy is one of the few large residential projects currently happening in Goa.
Gera continued, “Across my four undergoing projects (three commercial projects and one residential project, which is River of Joy) in Goa, my average sellout is 75-80%. This is because we have delivered consistently and people trust our brand. Even at the macro-economic front, we have seen improvement in corporate results. For this upturn to translate down the line, it will take some time.”
But, not all builders sounded as positive about the market scenario as Gera did. A builder from Panaji, on the condition of anonymity, said, “There’s still slowdown in the market. Although sales are happening but the volumes aren’t much. Not many new projects are launched. Even the economy is slow.”
A number of sources said that even though full recovery has not yet taken place in the real-estate sector, but the builders are using the recent positive run for exhausting their unsold inventories.
Ever since the slowdown hit the market after demonetisation, the builders were saddled with unsold flats. The recovery in the last few months have allowed them to sell their inventory. However, recovery is still not strong enough for the developers to launch new projects in plenty.
Datta Naik, managing director, Commonwealth Developer Pvt Ltd, said, “The market has recovered to an extent. The builders are exhausting old stocks. We are hopeful that post Diwali the market will further recover. Even general economy is looking up. However, there’s no reduction in the home loan interest rates. Not many new projects are coming up.”
One of the pain points for a number of home buyers is that the interest rates on home loans have not really softened. Fortunately, the general economy is looking better now than the last year. However, this recovery is yet to trickle down to everyone in the overall economic system. In short, the momentum for real-estate sector is positive compared to few months ago, but a lot of improvement is still desired.
Chinmay Borkar, director, Akar Realty, said, “The market is a lot more positive than what it was 6-7 months ago. The pickup happened in the last 3-4 months, as we have seen significant improvement in sales and conversions. The impact of new policies like GST and RERA has settled down now. Due to RERA, certain accountability has come in for new projects. The rate at which new projects are launched has come down. Now, big builders launch a new project only in 1 to 1.5 years time.”
While laws have really become stringent for developers in the real-estate sector, sources are also of the opinion that the government needs to do a bit of its duty to restore faith of consumers in the market.
Dr Jagannath (Desh) Prabhudessai, president of the Goa unit of CREDAI (Confederation of Real Estate Developers’ Association of India), said, “The government can assure the buyers by providing all the necessary infrastructure wherever a new real-estate project comes up.”
In the past, it has been seen that despite collecting infrastructure tax from the builders the government did not provide right infrastructure, which really dampened the spirits of the buyers.
On the overall market condition, Dr Prabhudessai said, “The market has shown some signs of improvement. But, the kind of improvement we had expected has not happened.”
A lot of prospective buyers are still holding on to the purchase decision in the expectation that builders will pass on the benefits of input-tax-credit under GST. However, builders said that they have already passed on the benefit of whatever input-tax-credit they have got. In other words, people will still spend some more time in getting used to the GST regime.
The macro-economic recovery, which has started recently, will take some time to positively impact everyone at the lowest strata of society. What is really important for the real-estate sector is that this recovery continues. If that happens, more builders will do well in near future. Otherwise, those, who are doing well now, may also face tough times ahead.
