Dubai
Seemingly all of a sudden, everything seems to be going in favour of the Indian property market.
The demonetisation drive of last November had cooled off buyer interest for the better part of three months, but, now, has less of a grip on demand. Certainly, end users within India and non-resident Indians are certainly scouting around for properties to snap up. Developers sure have cashed in, notably those in Mumbai, where some recent launches met with instant investor approval. A case in point was Omkar Realtors’ “Signet” launch, where 600 apartments ranging from Rs7.2 million (Dh414,000) to Rs10 million got bought off in less than 48 hours. (The project is located in Mumbai’s western suburb of Malad and due for completion in 2019.)
Not that the action is confined to mid- and upper-mid properties. If it is super-luxury investors crave for, India’s developers are not going to stand in their way. The Pune-based ABIL Group is working on a timeline to launch its Versace-branded homes at a pristine location just off Marine Drive — on Hughes Road — in Mumbai. For prices starting from a possible Rs600 million, buyers of the limited edition — just 10 in all — can have unrestricted views of the Arabian Sea and the Queen’s Necklace on Marine Drive. And if it’s the interiors buyers want to focus on, there’s always the Versace element. ABIL plans to launch the sales process “after completion of the first habitable floor”, according to Amit Bhosale, Managing Director. The development is heading for a late 2020 completion date.)
Staying with luxury, Omkar’s got a triple high-rise development — the 1973 — in World, Mumbai, where the top-end of the apartments command Rs1 billion. And there are no shortage of buyers for the homes (prices start from Rs150 million), with 75 per cent of the inventory sold.
According to JLL India, Pune, Navi Mumbai and Chennai are doing well in terms of transactions. But even as they tap domestic demand, developers are also keeping a line open for NRI driven sales opportunities. They will be present in strength at the latest Indian Property Show, which opens in Dubai on Thursday (June 8).
So, is India’s property sector moving beyond demonetisation and all set to make a fresh start with the promise of RERA (the Real Estate Regulation Act), which came into effect from May 1? Can the real estate market finally get to see a level of transparency that will be a win-win for developer and investor alike?
“RERA will induce a definite mindset change on the basis of its hard legal stance and sanitisation effect on Indian real estate,” said Anuj Puri, Chairman of JLL Residential, the consultancy. “Developers have no choice but to get more real by ensuring their agreements with buyers clearly reflect the new normal.”
The new regulations require project details and completion timelines to be made clear right at the outset. Developers can no longer expect to go about their project completion as and when they like it. Failures on any count could even set them up for jail time.
And RERA is not just about future projects. “Every ongoing and under-construction residential project — or projects which have not received their completion certificate before RERA became a law — come under the Act,” said Puri. “This means buyers now have a very clear picture of when they can expect possession, and what their legal recourse is if the developer fails to deliver.
“Sales agreements will now become legally enforceable documents, not mere statements of intent that they were for all practical purposes in the past.
“It also applies to the amenities and facilities mentioned in the sales agreement, from which there can be no deviation unless two-thirds of all buyers in a project agree to such changes. With RERA, we will see more uniform growth as fly-by-night operators with legally faulty projects will be edged out and stronger players take over in greater force.”
Developers of the sort merely intent on pushing fancy brochures no longer have a place in the Indian realty space. India’s real estate sector has finally transitioned into a rules-based industry.
But for developers, sticking to the laws will come at a cost. “Primarily, RERA safeguards customers’ interest and brings in transparency in all dealings,” said Dharmesh Shah, Vice-President, Sales & Marketing at Adani Realty. “However, there is a flip side to it — cost for developers may increase as sales can only take place post the registration, which is possible only after necessary approvals.
“So, the end-user would not have an advantage of sales during pre-launches. Also, with the higher holding costs, customers may need to pay higher prices for their dream homes. There will be a consolidation in the market and hence only organised players may exist in time to come.” (According to Adani Realty, developers will also need to factor in guidelines issued by the individual states in future sales and purchase agreements.)
But for the moment, India’s property buyers are only focused on the now. And if developers are willing to meet them halfway, they are only too keen to sign on.
“Many developers with projects in less enabled locations had to resort to price cuts to bring demand back,” said Puri. “In fact, prices are at their lowest and cannot fall any further. This, coupled with a significant reduction in home loan rates and also financing schemes by the developers, has brought about the most favourable market conditions for home buyers that we have seen in decades.”
BOX
Mumbai’s developers set the pace while North India lags
Developers in Mumbai were the fastest off the mark once it became clear that demonetisation’s impact — at least with end-user buyers — was going to be short-term.
“There has been an increase in new launches in Mumbai in the first quarter, but these are primarily new phases of existing projects,” said Anuj Puri of JLL Residential. “While this technically adds to the supply, it does not mean that new projects have been launched. These new phases were on the charts anyway, and land allocations had in many cases been made accordingly in the existing projects.
“The North India property market will need a longer recovery period in the post-RERA era, as buyer confidence was pretty low in the past. With RERA a reality, we are slowly seeing a return of confidence, especially for projects by strong institutional players with healthy completion track records. We will see North India emerge as a much stronger market over the next 12-18 months.”
