ICCPL PROPERTY NEWS

SLASHED CIRCLE RATES TO BOOST REALTY IN GURGAON

       Gurgaon, more popularly known as the millennium city, has been one of the most prominent regions in NCR’s realty sector. The kind of growth that it had witnessed during the last one decade kept the buyers active. Booming infrastructure and rapid price appreciation kept the investors busy. Although, this case study took a backfire, and for the last couple of years the demand for property has become stagnant and prices hitting a new record low. But the kind of appreciation it had once witnessed, the drop in prices was still not enough to lure the customers back into the market. In a move, that now brings a ray of hope for the revival of Gurgaon’s realty market, the state government has approved the circle rate cut for 2016-17 by as much as 15 percent with few areas to get 10 percent deduction as well.

“A drop in circle rates is directly proportional to decrease in property prices, and as property prices fall, the demand for the property plays an inverse relation. Falling property prices help in attracting end users more than investors, and it is crucial for Gurgaon’s realty sector to revive. The infrastructure is very sound and now with prices lowered, we’ll witness the comeback of buyers”, avers Kushagr Ansal, Director, Ansal Housing.

Realty sector in Gurgaon has been going through a lull phase, and it is also for the first time that circle rates have been reduced in the corporate hub. For the last two financial years, the rates were not reduced that resulted in negative buyers’ sentiments and even the developers’ fraternity was pushing the government to offer a rate reduction this time. “When the circle rates were higher, it was denting the market sentiments as even the taxes were to be paid on the basis of the circle rates. Even during resale, buyers suffered the high capital gains tax, as circle rates were beyond the market rates. As a result, no fresh buyers were visible and even resale was becoming out of question. With this move, practical pricing will return to Gurgaon that will help in pulling back the lost momentum”, explains Rakesh Yadav, Chairman, Antriksh India.

The state government has provided the highest relaxation in private colonies, HUDA sectors and other residential colonies falling under the older city. For instance, rate of residential property registrations from Sectors 58 to 113 will get reduced from 3,000 per sq. ft. to 2,550 per sq. ft. Commercial properties in the same regions will get registered at 85,000 per sq. ft. from 1,00,000 per sq. ft., earlier. For the HUDA sectors, the floor rate has also been reduced from 4,500 per sq. ft. to 3,850 per sq. ft. The city also has eight group housing societies where the rate has been reduced from 3,800 per sq. ft. to 3,250 per sq. ft., whereas for commercial, the rate has come down to 7,450 per sq. ft. from 8,800 per sq. ft. This rate cut is also to be implemented for industrial sectors. Once the rate cut gets implemented, circle rates of chief residential regions like DLF Phase 2, 4 and 5 will drop to 61,200 per sq. yd. from 72,000 per sq. yd. earlier. Likewise, at DLF Phase 1 and Sushant Lok, rates will get reduced to 65,450 per sq. yd. from 77,000 per sq. yd. “As the rate cut effect gets operational, buyers’ sentiments will improve significantly. The overall cost is likely to come down as these rates are also the basis of tax calculations which indirectly pinch a customers’ pocket. Earlier, buyers were forced to pay additional stamp duty and capital gains tax on the differential values as well, that resulted the buyers to shell out extra amount. This move will thus, eradicate the extra payment that buyers were making which in turn will allow them save money and invest elsewhere on property buying”, elucidates Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz.

Commenting upon how well the Gurgaon realty market might shape up, post this decision, Vikas Sahani, CMD of Property Guru concludes, “Several thousand units are lying vacant in Gurgaon with no takers at all. The demand for property had come to a standstill as prices till last few years were roaring. With this move, prices will get reduced and become realistic, thus allowing the properties to cost much less to the buyers. The effect on demand will be prominent till the next quarter as we’ll also have festive season around the corner. End users as well as investors will become active again that will help in picking up Gurgaon’s realty prospects for future.”

ICCPL PROPERTY NEWS

SEBI MAKING REIT ROUTE EASIER FOR REALTY

        With the dawn of Affordable Housing, Housing For All and Smart Cities Mission, demand for property is projected to multiply in the course of next few years. There is no denying in the fact that today, the realty sector of India is facing a strong cash crunch and dampened investors’ confidence. The failure of analysing real demand, improper infrastructure, saturation of Tier 1 cities, property price escalation, stringent FDI norms and absence of a regulator in the sector had caused real estate in India to hang by a thread. Thus, the projects that were launched earlier and those that are on verge of getting ready, or have delayed, has been the work without much supervision; as a result, failing to impress today’s market. Whereas, the plans of today will blossom tomorrow and it is crucial for the government to provide much needed support to revive the sector. Although, the government over the last couple of years has brought in several measures to ease the ways of conducting business in the Indian real estate sector that will help the demand to grow in near future. With the Securities and Exchange Board of India (SEBI) relaxing norms for REITs for investment in realty sector, the cash crunch problems will be answered and hopes will be high for a better demand of property in future.

Real Estate Investment Trust (REIT) is a company that owns or finances income-producing real estate. Much like mutual funds, REIT provide investors with all types of regular income streams, long-term capital appreciation and diversification. This tool allows anyone to invest in portfolios of large scale properties, by way to investing in stocks. The stockholders of REIT earn from the income produced without having to own or finance a property. Recently, the Budget Session 2016-17 had announced the evasion of Dividend Distribution Tax (DDT) from the income arising out of REITs, thus making it a more lucrative deal for the investors. SEBI, on the other hand, has increased the proportion of holdings for under-construction properties. Adding further, SEBI has also proposed changes that would make it easier for eligible offshore fund managers to relocate to India, plus allowing them to register as portfolio managers or as investment advisors. “The investment cap of REITs has been increased from 10 to 20 percent for under construction projects. Indian realty sector is pretty much starving and REIT will here provide a much needed alternate route of fund raising and attract several small and medium level investors in the sector. With plans to upgrade Indian infrastructure already laid, REITs might serve as a chief instrument in years to come”, explains Vikas Pundir, CMD, SKB Group.

Also agrees Kushagr Ansal, Director of Ansal Housing, as he says, “The REITs route has been eased enormously over the last few months. Removing DDT from the income earned through REITs and now increasing the investment cap will surely boost the investors sentiments. But, with the promise of high investment and returns, comes greater risk as well. If a project gets delayed, the chances of funds getting stuck are very high. Although, RERA has now become an Act and will now look into timely completion of projects. If Single Window Clearance System gets operational Pan-India, investors will feel more secured while investing with a long term vision.”

Indian residential real estate sector has plans to deliver over 7,50,000 units in the next 4-5 years with commercial real estate quickly gaining momentum as well. Thus, there are a wide variety of options available for investors along with a huge scope of returns. “At present, there is almost 250 million sq. ft. of office space that is eligible for REITs and if even 50 percent of these get listed, there will be a total REIT listing of around Rs. 1,34,000 crores. InvITs have also started to make rounds with SEBI recently approving two out of the four applications for the same. Infrastructure in India is soon to take a giant leap with lots of funds allocated for Smart cities mission and Housing for all. With so much real estate in pipeline, REITs will perform successfully”, avers Ankit Aggarwal, CMD, Devika Group.

“REIT is a concept which has been followed by several countries abroad, more particularly in the realty sector. Considering the results of REIT in those countries, even Indian government has introduced it here. REITs are to work under the control of SEBI which earlier had some tough regulations. However, now allowing the investments in under-construction projects, it will prove to be a game-changer. Also, SEBI has removed the restrictions on SPVs, who are now allowed to invest in the holding & assets of any other SPVs. Therefore, the realty fraternity definitely welcomes this step and hopes that it will boost the sector’s pace in near future”, elucidates Ashwani Prakash, Executive Director, Paramount Group. Like REITs, Infrastructural Investment Trust (InvIT) is much like mutual funds, that enables direct investments of small amounts of money from individuals or institutional investors with a promise of small amounts of returns. Even InvITs is rapidly gaining momentum with several institutional investors showing keen interest.

Concluding on the chapter and elaborating on how REITs and InvITs will shape up the Indian realty sector’s future, Vikas Bhasin, MD of Saya Group says, “The government is leaving no stones unturned to pick up the country’s realty sector and present it on the global map. Easing ways of doing business, attracting FDI and appointing instruments such as InvIT and REIT to boost the cash flow in the sector are a proof of the eagerness shown by the government towards this sector’s success. It is evident that there is a massive fund crunch in the sector with projects getting delayed; and to fight it out, government is working in two ways; boosting investors’ confidence by making entry’s and exit’s easy and bringing policy reforms to enhance transparency. Once REITs and InvITs become fully operational, this sector won’t remain cash starved, plus offer returns to the investors, better then any other country due to the large scale production that is present here.”

ICCPL PROPERTY NEWS

YAMUNA EXPRESSWAY: A LONG LOST ROAD

        Years 2005-08 witnessed NCR realty sector’s best times, where capital appreciation and demand were few of the parameters that judged its positive performance. During those very years, several regions in the NCR came up and promised long term growth and success. Although, by the end of 2008, global recession had adversely impacted economies, industries and sectors; where realty sector was no exception. Emerging regions of those days could only catch the limelight for a very short time and later, negative sentiments and monetary insecurity made the investors run away from those markets. Yamuna Expressway’s case study is a strong example where a region riding on strong establishing infrastructure came up. The promise was such that developers wasted almost no time in acquiring huge land banks and launched projects. But as the time progressed, the region saw a steep dip in demand from 2010-12 and then picked up pace later in 2012 when the expressway got inaugurated on 9th August. Although, this impact was momentary as again the region is now witnessing a lack of demand. But, ray of hope is still there as the Master plan 2031 promises a huge scope of improvement and the news of Jewar airport is provoking the investors. The long term vision of the region looks great and promises better returns in coming days.

Speaking about the current layout and plans for the region, Rajesh Goyal, Vice President CREDAI-Western U.P. & MD, RG Group avers, “Yamuna Expressway has got zones divided for all kinds of infrastructural activities. Separate zones have been allotted for institutional development, affordable housing, industrialisation and specified areas for mixed land use projects. Both the central and state governments are playing their roles for this region. The state government has many link up plans for this area in the future and moreover, a lot many satellite towns can be developed along the stretch of this road once habitation reaches its optimum level. FNG corridor’s third phase link up with Yamuna Expressway will see more areas being opened up to infrastructure in the years to come.”

A history that promised

The 165 Kms long, 6-laned expressway was completed at a cost of Rs. 128.39 billion after a couple of years delay than the expected date. It connects Greater Noida to Agra, thus enhancing the realty prospects of the neighbouring regions ahead. “The primary purpose of this expressway was to reduce the travel time between Delhi and Agra and provide a better connectivity later. Such strong infrastructure in place meant that developers come up in a big manner. Initially, this feat was achieved but could not gain momentum as plans were not implemented on time. Although, talks are making rounds about Airpot coming up at Jewar along with metro connectivity in future which will bring the market back in a better manner”, states Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz.

Whenever a new development or an announcement happen, a pool of positive sentiments start floating that gives a sudden rise to demand. In case this demand is not met on time, the negative side of it becomes prominent. The moment this news of developing a roadway connecting Greater Noida to Agra came up, developers came out with lots of projects. Initially, the sales were very high but the infrastructure could not come up on time, as a result the demand took a tumble. “The infrastructure in the region could not cope up with the kind of supply realty sector provided. Investors began running away from the market as acceptance quotient got weak over time. Although, with more plans coming up to revamp the region and bring along better infrastructure, the demand for housing along Yamuna Expressway has off late started to pick up pace as investors are making a strong come back. The news of Jewar airport has come in as a catalyst that will lead to a positive impact on the demand in near future”, explains Ashok Gupta, CMD, Ajnara India Ltd.

A better future script

“Yamuna Expressway is not a primary development, it is tertiary. It has the infrastructure ready around which real estate can build up. In fact, with huge land parcels available along the entire stretch of the expressway, development can be fast paced. The future is very bright for this area as can be judged by the push it is getting time and again. A lot many people have already invested in this region banking on it’s potential and growth it will see in the years to come. Massive scale developments are lined up in the area. Once the running projects are near completion and families start moving in, it will automatically generate a catchment area for future commercial establishments”, enlightens Manoj Gaur, President CREDAI-NCR & MD, Gaursons India Ltd. With over two dozen of developers offering over a hundred projects, there is already a lot of supply available in the region. The product variety is huge ranging from a 1/2/3/4/5BHK to penthouses, plots, villas, duplexes and much more. Prices are extremely competitive as the region is developing with a lot of work in pipeline. Average price in the region vary from Rs. 2,800 – Rs. 3,200 per sq. ft.

On the government front, there are lots of sectors being developed. Residential development is carried at Sectors 18, 20 and 22D, with Sector 13 being a mixed land use region. Affordable housing has also been promoted at Sector 22D with 22E coming up as an institutional sector. Sector 32 and 33 are being planned as industrial sectors with plans for LIG and HIG development in Sector 22D as well. Development plans for two power stations of 33KV are in place along with a multipurpose bhawan. Even PPP model is quickly gaining momentum with a lot more civic facilities to be made available soon. Thus, on the residential and infrastructure fronts, government and the concerned authority are working diligently to take this region to a next level. “The development of night safari, electronic manufacturing hub, IT zone is already in pipeline which is bound to generate employment in the region and boost the requirement of residential properties in the region. Presently, YEIDA has developed lower/middle income group residential schemes and private developers have also stepped in with various projects. It is expected that after 3-5 years, this area is likely to be connected by metro. This region has its own future and would definitely grow with good infrastructure and is expected to give good returns to the present property investor”, elucidates Ashwani Prakash, Executive Director, Paramount Group.

Speaking about the current real estate scenario and future prospects of Yamuna Expressway as a region, Vikas Sahani, CMD, Property Guru concludes, “At present, this region is witnessing a strong work by the authority towards the infrastructure front which will be the real game-changer for the realty sector of the region. Investors planning property purchase for long term, are most welcome, but the current scenario is not that good for the short term investors or even end users. Although, if Jewar airport and metro comes in vicinity, this will hugely benefit the region and its neighbours; which in the long run will shape Yamuna Expressway into a skyline of NCR realty.”

ICCPL PROPERTY NEWS

SLUGGISH REALTY RIDING ON PE FUNDS

     There has always been a strong history of institutional investment in Indian real estate through both mediums; direct ownership of property and pooled investment funds. Going back a bit in history, institutional real estate investments had dominated the sector and it was during 1990s that led to the emergence of strategic funds that were targeted to take the benefit of falling property prices and hefty discounts. Thus, in the beginning of 21st century, private equity in real estate came into picture as an independent asset class and has been experiencing a huge growth off late. And even though the real estate sector’s domestic front looks dampened, the PE fund inflow has gained momentum riding high on the norms flexibility government has provided over the last couple of years. This inturn is allowing the Indian real estate sector to maintain a good balance of funds and is acting as a messiah in this sector’s revival days.

“Even though the domestic demand has failed to meet the expectations of the sector, international fund flow has ensured the upward side of the demand graph. Total private equity investments from foreign funds in Indian real estate grew by over 30 percent from 2014 to 2015, and in fact, this number shaped up much better in the first half of 2015 and even better this year. DIPP’s flexibility of norms and relaxation towards entry/exit barriers has done the trick and the government’s decision towards allowing 100 percent FDI in construction will be fruitful in years to come”, avers Manoj Gaur, President CREDAI-NCR & MD, Gaursons India Ltd.

“For any foreign investor, India is a real potential market that promises long term returns. Speaking about the real estate sector, government has provided a strong boost through its policy measures as well as mammoth infrastructural upgradation plans. With such announcements, private sector and primarily, international front will become extremely active as plans are big and will yield greater returns in future. Tier 1 cities will have the biggest chunk out of it and even last year itself, MMR, NCR and Bengaluru have in themselves accounted for over 70 percent of foreign PE investments”, explains Rajesh Goyal, Vice President CREDAI-Western U.P. & MD, RG Group.

Infrastructural developments in a country serves as the backbone for its realty sector and this is exactly where India is standing out as a strong market. At the same time, having a policy framework that supports and promotes ease of doing business especially for foreign nationals play a vital role towards attracting foreign funds. “PE funds inflow has been on a constant rise and will continue as India promises infra development on a large scale and the government eases the ways of doing business. Conditions of area restriction of floor area of 20,000 sq. mtrs. and minimum capitalisation of $5 million required within six months of commencement of business had been removed and since then a lot of FDI has flown in. Another important element that has come up and will act as a catalyst is the implementation of Real Estate Act. Foreigners transacting in India will now have a much secured environment to conduct business”, elucidates Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz.

Investments made during early 2000s and till the recession year, i.e. 2008 could not yield good results, coupled with depreciating rupee by almost 45 percent over the last half a dozen years had made investors largely hesitant. On the flipside though, in the upcoming 4-5 years, Indian residential real estate is projected to deliver almost 10 lakh units and thus there is a huge scope for inflow of funds. “In the first quarter of 2016, private equity investments rose by almost 40 percent at Rs. 3,840 crore versus YoY Q1 2015, and here residential front took the majority share. Even the overall funds inflow had grown by over 30 percent in the first quarter, where even the number of deals closed rose significantly. Relaxation of FDI norms and promise of better infrastructure along with hefty supply coming up are the real reasons behind this funds growth”, enlightens Vikas Bhasin, MD, Saya Group. Residential real estate in India has always been in demand due to the ever growing population. Answering the housing needs of the public was always in the manifesto of the current government where Housing for all by 2022 and Affordable housing has been the key jargons. “Participation of investors in real estate through private equity has been a result of long term visions and plans by the government. Housing for all, Smart cities and affordable housing is keeping the interest of the investors extremely active, as these are all long term plans that will yield better returns. As the real estate sector move towards better policy implementations, investors will feel much more secured. Real Estate Act is now in place, and if industry status and single window clearance is executed in Indian real estate, this will greatly attract more foreign investors and multiply funds inflow”, shares Rakesh Yadav, Chairman, Antriksh India.

Speaking about how well the PE funds market has groomed in India with a lot more still in pipeline, Kushagr Ansal, Director of Ansal Housing concludes, “India has always been an untapped resource which is now gaining popularity amongst the globe, riding with strong policy measures taken by the government. Our realty sector contributes 5-6 percent annually towards the GDP and thus, it is imperative to keep the things active here. Over the last couple of years, funds inflow has increased drastically especially in Tier 1 realty regions. Tier 2 and 3 cities will gain momentum as Smart cities and AMRUT has been worked upon. We are expecting private equity market to grow by almost 60-70 percent in the upcoming 3-4 years versus today, particularly towards residential real estate, which will be closely followed by commercial and retail as well.”

ICCPL PROPERTY NEWS

GAIN TO AFFORDABLE HOUSING IS A LOSS TO RENTAL HOUSING

       Off late, Indian real estate sector has been going through a thorough revamp phase on the policy reforms front and mega announcements with respect to infra upgradation in the country. All this has been a recent addition for the realty sector that plans to revolutionise it. Housing for All has been a jargon for almost two years now and the public has been looking up to the government and the private sector to offer a roof over everyone. At present, people reside in two ways, one in their own abodes or second, in a property bought by others for which some amount is to be paid each month; in simple words, rented accommodation. Now, price factor is the only concern in India where public and private sectors need to cooperate and come out with a solution, i.e. low cost housing. Affordable housing will definitely address to this need but at the same time, if the cost of EMIs can beat the rent per month, then why won’t people go into buying homes rather than staying on rent?? So, is rental housing nearing its doom days in India??

“India has a housing shortage by almost 2 crore units where more than 90 percent accounts to economically weaker sections and low income groups. At the same time, major realty regions across India are witnessing over supply of units by almost 7,50,000 throughout NCR, MMR, Bangalore, Chennai, Pune and few others. Thus, Indian realty market is in dire need of low cost housing and the moment private sector and government come out with such assignments, there will be a major supply of affordable units across the nation and the demand will be well met. This in turn can take rental housing demand for a ride as people will then have a property that they might be able to afford and there is nothing better than having a home of own”, explains Rupesh Gupta, Director, JM Housing.

Rental real estate market has served as a backbone for the Indian realty sector for decades and it has significantly contributed towards the growth of the realty sector. But as the affordable housing segment grows, rental housing aspect will be on the loosing end. Commercial rental realty market is still in its growth phase as commercial real estate is still catching pace in India. But rental housing segment now falls in danger as people will be able to buy a property and not required to rent one. “Even in the budget speech this year, major incentives were offered for affordable housing and rental housing. As the demand for affordable housing gains momentum, there will be an inverse relation visible for the rental housing as there will be no takers for the rental accommodation once people have properties of their own. In either cases though, real estate sector will be the winner”, avers Ankit Aggarwal, CMD, Devika Group. Adding further and speaking about the flipside in sync, Vikas Bhasin, MD, Saya Group elucidates, “There is still a lot of time for affordable housing shortage to be met and till that time, rental housing is the key to maintain the demand in the economy. It is true that affordable housing when reached to all might be a dampener for rental housing segment and take off the investors from the market, but till that time, rental housing will be the only viable option available to address the low cost housing needs.”

The government is also working diligently to cater to the housing needs of the public and therefore, the Union Budget 2016-17 had a bouquet of incentives in offer for affordable housing and rental housing. For the the first time homebuyers, government has offered an additional deduction of Rs. 50,000 per annum for loans extending upto Rs. 35 lakhs sanctioned in 2016-17, where the cost of the house does not exceed Rs. 50 lakhs. On the other hand, HRA deduction has been raised by Rs. 36,000 under Section 80GG, thus promoting rental housing as well. “The real estate scenario in our country will very soon land in fix, where affordable housing will be in trend and there will be no tenants that might reduce the investors and second time homebuyers base. Once everyone has a roof of their own, then why will somebody desire to put up in a rented property? When affordable properties will be in abundance, there will be a direct battle between EMIs and monthly rents, whichever costs less will attract the resident there. There might then come a time when commercial real estate will witness a boom in demand and see better days as future of housing will get completely secured”, states Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz.

In fact, from the developers’ perspective, the Budget speech has been much more favourable if we speak about affordable housing construction. Developers building affordable housing projects will not attract any taxes on the profits earned. “By offering various benefits to the developers considering affordable housing, the government has proved its focus area and this in turn can help promote housing demand in near future. Even the new entrants have a lot to cheer about plus, this will also make several entrepreneurs plan a business in real estate. Few years down the line, we are predicting a boom in housing but, a gradual decline in rental housing market”, enlightens Rahul Chamola, MD, One Leaf Group.

Speaking about how affordable housing is the next door for Indian real estate’s revolution and a spike for the demand of rental housing, Ashok Gupta, CMD of Ajnara India Ltd. concludes, “Since the emergence of the new government, there have been lot many expectations, where real estate sector has been no expectation. The demands of the fraternity and its buyers has been heard off many times as well, and this is where affordable housing has been the highest gainer of them all. Even though the government is jointly promoting affordable housing and rental housing in order to boost the overall demand for housing, and as affordable housing gets in the groove, rental housing might be on the loosing end. The good news will always be that everybody can own a abode of their on own.”

ICCPL PROPERTY NEWS

GAIN TO AFFORDABLE HOUSING IS A LOSS TO RENTAL HOUSING

       Off late, Indian real estate sector has been going through a thorough revamp phase on the policy reforms front and mega announcements with respect to infra upgradation in the country. All this has been a recent addition for the realty sector that plans to revolutionise it. Housing for All has been a jargon for almost two years now and the public has been looking up to the government and the private sector to offer a roof over everyone. At present, people reside in two ways, one in their own abodes or second, in a property bought by others for which some amount is to be paid each month; in simple words, rented accommodation. Now, price factor is the only concern in India where public and private sectors need to cooperate and come out with a solution, i.e. low cost housing. Affordable housing will definitely address to this need but at the same time, if the cost of EMIs can beat the rent per month, then why won’t people go into buying homes rather than staying on rent?? So, is rental housing nearing its doom days in India??

“India has a housing shortage by almost 2 crore units where more than 90 percent accounts to economically weaker sections and low income groups. At the same time, major realty regions across India are witnessing over supply of units by almost 7,50,000 throughout NCR, MMR, Bangalore, Chennai, Pune and few others. Thus, Indian realty market is in dire need of low cost housing and the moment private sector and government come out with such assignments, there will be a major supply of affordable units across the nation and the demand will be well met. This in turn can take rental housing demand for a ride as people will then have a property that they might be able to afford and there is nothing better than having a home of own”, explains Rupesh Gupta, Director, JM Housing.

Rental real estate market has served as a backbone for the Indian realty sector for decades and it has significantly contributed towards the growth of the realty sector. But as the affordable housing segment grows, rental housing aspect will be on the loosing end. Commercial rental realty market is still in its growth phase as commercial real estate is still catching pace in India. But rental housing segment now falls in danger as people will be able to buy a property and not required to rent one. “Even in the budget speech this year, major incentives were offered for affordable housing and rental housing. As the demand for affordable housing gains momentum, there will be an inverse relation visible for the rental housing as there will be no takers for the rental accommodation once people have properties of their own. In either cases though, real estate sector will be the winner”, avers Ankit Aggarwal, CMD, Devika Group. Adding further and speaking about the flipside in sync, Vikas Bhasin, MD, Saya Group elucidates, “There is still a lot of time for affordable housing shortage to be met and till that time, rental housing is the key to maintain the demand in the economy. It is true that affordable housing when reached to all might be a dampener for rental housing segment and take off the investors from the market, but till that time, rental housing will be the only viable option available to address the low cost housing needs.”

The government is also working diligently to cater to the housing needs of the public and therefore, the Union Budget 2016-17 had a bouquet of incentives in offer for affordable housing and rental housing. For the the first time homebuyers, government has offered an additional deduction of Rs. 50,000 per annum for loans extending upto Rs. 35 lakhs sanctioned in 2016-17, where the cost of the house does not exceed Rs. 50 lakhs. On the other hand, HRA deduction has been raised by Rs. 36,000 under Section 80GG, thus promoting rental housing as well. “The real estate scenario in our country will very soon land in fix, where affordable housing will be in trend and there will be no tenants that might reduce the investors and second time homebuyers base. Once everyone has a roof of their own, then why will somebody desire to put up in a rented property? When affordable properties will be in abundance, there will be a direct battle between EMIs and monthly rents, whichever costs less will attract the resident there. There might then come a time when commercial real estate will witness a boom in demand and see better days as future of housing will get completely secured”, states Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz.

In fact, from the developers’ perspective, the Budget speech has been much more favourable if we speak about affordable housing construction. Developers building affordable housing projects will not attract any taxes on the profits earned. “By offering various benefits to the developers considering affordable housing, the government has proved its focus area and this in turn can help promote housing demand in near future. Even the new entrants have a lot to cheer about plus, this will also make several entrepreneurs plan a business in real estate. Few years down the line, we are predicting a boom in housing but, a gradual decline in rental housing market”, enlightens Rahul Chamola, MD, One Leaf Group.

Speaking about how affordable housing is the next door for Indian real estate’s revolution and a spike for the demand of rental housing, Ashok Gupta, CMD of Ajnara India Ltd. concludes, “Since the emergence of the new government, there have been lot many expectations, where real estate sector has been no expectation. The demands of the fraternity and its buyers has been heard off many times as well, and this is where affordable housing has been the highest gainer of them all. Even though the government is jointly promoting affordable housing and rental housing in order to boost the overall demand for housing, and as affordable housing gets in the groove, rental housing might be on the loosing end. The good news will always be that everybody can own a abode of their on own.”