One perhaps needs a bird’s-eye view to understand the wave of transformation setting into India’s real estate sector. Caught amid a rough sea of new reforms, the industry has begun showing intent to steer the ship back into normality.

At the same time the market is grappling with the absence of stimulus to nurture mainstream demand. However, the new paradigm of transparency and consolidation achieved in the process should pave the way for a healthy momentum in attracting global capital.

At the end of 2017, India’s residential sector appears to have shrunk to a fraction of its size in less than a decade. Eight key cities — including metros and some promising Tier 2 centres — collectively saw just over 100,000 new residential units enter the market.

Similarly, sales volumes were restricted to 228,000 units, a fragment of its scale in the recent past. While the market has been on a steady decline, the past 12-odd months were an acid test for the sector.

Nevertheless, the near standstill triggered by demonetisation seems to have tapered. Stakeholders also appear to be growing in confidence with the gradual acceptance of structural reforms such as the Real Estate (Regulation and Development) Act, 2016.

The industry, however, is still grappling to navigate its way through the new tax regime post the introduction of the Goods and Services Act (GST). Select markets wherein the RERA has matured have witnessed developers relaunch projects at attractive prices, which has led to an uptick in sales. The strategic switch in developers’ approach has led to a price reduction is most markets. This is an unprecedented trend in Indian realty.

The new order is also opening new pathways for growth. For instance, a metamorphosis is taking shape in India’s warehousing, manufacturing and logistics sectors. Driven by structural reforms such as the single tax regime and the more recent acceptance of the logistics industry in the infrastructure fold has catapulted the scope of the sector by astronomical proportions.

The ease of picking up longer term capital at a lower cost would bolster growth to newer highs. Nearly four dozen economic corridors and 24-odd multimodal logistic parks have hit the drawing board. Thoughtfully linked to national highways, these government-backed developments would be like never-seen-before freight aggregation hubs with an end-to-end spread of warehousing, cold storage and similar facilities At the same time investments worth billions of dollars are pouring in. One of the leading developers has rolled out a five-year capex commitment of a staggering Rs100 billion.

The potential assumes greater relevance when we look at other asset classes in Indian real estate. The office leasing market has maintained strong fundamentals although expansion concern for the turbulence-hit tech sector is still prevalent. Further, the struggle for new office blocks appears to be unceasing in the near future.

Driven by manufacturing and e-commerce, warehousing space is projected to touch 839 million square feet by 2020 with a growth rate of 8 per cent across seven top markets in the country. Going forward, the government’s emphasis on housing and its efforts to mitigate risks though structural reforms is gradually building confidence in consumers and big market stakeholders such as institutional funds.

A number of these investors have made changes to the portfolio allocation strategy, allowing investment exposure to Indian real estate. The pension and private equity funds are investing in commercial assets and also in under-construction residential properties.

There is also an uptick in capital movement aboard in form of overseas residences. Traditionally, the desire for an overseas home in India has been largely driven by fascination for exotic locations or as a safe shelter for children studying aboard. But today, resident Indians investing in residential properties overseas are mostly doing so as sound investments.

After Moody’s and Standard & Poor’s ratings, Fitch Ratings has also backed India. Fitch Ratings has put India on top of its list of countries with growth potential. The recognition is an endorsement of the structural resilience in our macroeconomic architecture.

According to the “Global Economic Prospect Report, June 2018” of The World Bank, the economy is expected to grow 7.3 per cent this year and by 7.5 per cent in the next two. The expected stellar performance will make it the fastest growing economy in the world.

The overall resurrection of the real estate sector would depend upon the long – term impact and benefits of structural reforms brought into the sector over the past 12-odd months.

Shishir Baijal is Chairman & Managing Director, Knight Frank India.