The latest Knight Frank report shows that Private Equity (PE) investment fell to $3.1 billion (Rs 20,000 crore) in 2016 from $3.6 billion in 2015. Housing project investment during this period more than halved to $1.1 billion (Rs 7100 crore). PE investment in realty sector will flow on the basis of the economical move and GDP growth of the country.
Even with RERA implementation on May 01, 2016 PE investors look disoriented while investing in realty units of the country at present. RERA is likely to bring positive measure in PE investment sector. But from PE viewpoint the investment would build upon several facts like speedy approvals of projects by the government. Investment decision may vary on the ground of changing market condition. Yet, both the developers and buyers will be legal bound in terms of realty dealings. Currently there is shortage of inflow in realty development, builders need funding from trusted sources.
Real estate market had been hit hard by Demonetization and Benami property rules. RERA implementation has in a way restricted new launches with law bounds. Simultaneously high land price, cost of properties, approval delays led to shortage in market demand. After RERA came into force on May 1, 2017, most of the states were unable to submit their notified RERA regime. Those who notified their respective RERA rules either diluted the central law to sideline most of the ongoing projects or without any Real Estate Authority (RA) set up. Remaining number of 13 states are in their drafting stage, among which eight states draft rules have been published, yet not complete.
Union budget of 2017 was a boon for the affordable housing sector in the country. Central government gave infrastructural development to this very sector, following by other attractive incentives and tax redemption. Affordable housing could be the growth driver for the realty industry in coming days according to the experts. This will widen institutional investment scopes for PE firms and will be assisting developers to raise funds at a reasonable rate.
RERA chapter expert West Bengal Mr. Mahesh Somani said, “RERA has its own legal route to get developers a complete understanding of financial values. Investments that used to come from the outlawed pockets of the industry will now be cross-checked under RERA regime. This might cause a temporary market slowdown, but will be favorable in long run as it will bring positive investment sentiment into realty.
- Somani Realtors News Network