In India, Real Estate is the third largest GDP contributor. According to market experts, the market will grow to USD 180 billion by 2020 which will be really remarkable.
The current year was a year of turmoil for the residential real estate in India with large unsold inventories, delayed projects and demonetization in the last quarter of the year. Yet some of the biggest game-changing policies such as GST and RERA cleared legislative hurdles and are expected to be implemented soon. With the Benami Transactions Act expected to arrive soon, the sector can expect more transparency. Overall the legislative landscape is looking at developing a scenario where the investor confidence in the real estate sector gets a boost.
In the recent times the residential property is no longer seen as the ideal investment it was considered once. Some key reasons for the same are :
Slow or no development: In the past many years, people have lost their life savings over some dubious projects which either never started or didn’t complete on time.
High tax rates: Stamp duty, VAT, and other taxes increase the cost of the unit by 30-35 percent which is quite huge.
Unsold inventory: With buyer confidence taking a hit , there was a huge backlog of unsold inventories, however in the first 3 quarters of 2016 a new trend emerged, wherein higher numbers of built units were sold compared to new launches. This had reduced the inventory overhang, but demonetization did play a dampener.
Slow decision-making process: For any project to pass, builders have to address a lot of different institutions wastes time and money.
Residential real estate Delhi NCR, Mumbai and other major metros took a hit in recent times but it is good news for investors interested in residential property and for home buyers since prices of residential real estate in India have really bottomed out. A homebuyer should however be careful and invest in either ready residential property or with very reputed builders with a good track record.
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