The Indian real estate market is in the process of transformation
In the last 12 months, the affordable housing segment has been the driving force behind the growth of the real estate industry, having consistently outperformed all the other housing segments, says Ashish R. Puravankar - Managing Director, Puravankara Ltd
- Given the lingering impact of GST and demonetization, how was the performance in 2018?
Post demonetisation GST, buyers were tentative in term of investing in homes, essentially sitting on the fence to observe how these policies would impact the investment in real estate. Today however, buyer confidence is back and this has given a big boost to the real estate sector. The Affordable Housing sector in particular witnessed an increase in demand in the last 3 quarters. This has been a revelation so far and has generated great interest amongst the buyers given that the concessional GST stands at 8% for those under the Credit-Linked Subsidy Scheme (CLSS).
Also, the GST advantage of buying a ‘ready to move in’ home has multiplied the demand for ready inventory. Customers are once again willing to invest in their dream homes, also aided by stable capital values that assure them of rich dividends on the investment made.
On the other hand, the commercial market has also performed exceedingly well. Along with an increase in demand for office spaces, the segment has also benefitted from an increase in the investments by expats/NRIs. In efforts to capitalize on this very trend, we recently announced our plans of developing 10 million sq. ft. of commercial spaces in the next five years.
- Can you give us an outlook of the real estate market?
The Indian real estate market is in the process of transformation. These policies and reforms have had a direct impact on the morale and confidence of all the stakeholders – developers, customers and investors, leading to an upswing in purchases and sales.
In the last 12 months, the affordable housing segment has been the driving force behind the growth of the real estate industry, having consistently outperformed all the other housing segments. The commercial segment has also done remarkably well during this period with demand for grade-A office spaces in metros outnumbering the existing supply due to the growing presence of start-ups and multinationals alike. Also, co-working spaces is the new buzzword in this segment. 2019 will also see India’s first REITs listing and the concept has already generated a massive buzz amongst both developers and customers. Overall, positive performance in the last 12 months has given a significant boost to the industry’s prospects for the coming future.
- What impact does present regulatory environment have on the developers?
The current regulatory environment presents both opportunities and some challenges for the developers. On one hand, the effective implementation of GST and RERA has managed to create a level playing field for all organised developers and builders in the country. The single consolidated tax system has brought in further clarity, transparency and the simple tax structure has encouraged homebuyers to invest in their dream homes. This has also attracted interest from investors, indicating positive growth. Furthermore, the reduced tax rate on construction materials like cement and steel by contractors has also been passed on which helps lower construction cost for developers. Similarly, RERA has brought with it a much needed regulator in place, paving the path towards the growth and development of the industry. Due to RERA a trend of consolidation has been observed in the industry with developers entering into JDs with other developers for whom the cost of regulation is not a hindrance, thus ensuring timely completion and delivery of quality projects.
But while all this has been helpful in Karnataka, the recent move towards revising the guidance value of properties might set the industry back and as a result, the consumers might have borne the additional financial burden.
- Please brief us on some of the major projects that have been commissioned or in the advance stages of completion?
Some of the projects which are on the verge on completion are:
- Purva Westend, Hosur road, Bangalore
- Purva Skydale, Harlur, Bangalore
- Purva Sunflower, Magadi Road, Bangalore
- Purva Amaiti, Singanallur, Coimbatore
- Purva Windermere, Pallikaranai, Chennai
- Purva Silversands, Keshav Nagar, Mundhwa-Pune
- The Tree by Provident, Herrohalli Village, Bangalore
We have also launched two of our marquee projects last year – Provident Park Square in Bangalore and our first project in Goa – Adora De Goa.
