The living room of a three-bedroom apartment in Oberoi Realty’s Sky City Image Credit: Supplied

A series of reforms introduced by the government in the past year, including the establishment of the Real Estate Regulatory Authority (Rera) regulations and the Goods and Services Tax (GST), is being hailed by India’s real estate stakeholders as a timely game-changer for an industry that has suffered from a lack of transparency and accountability for years. It may well be the best time to invest in property, claims one Indian developer. A revolution says another.

“The last one year has been completely a revolutionary era for the Indian real estate sector,” says Gulam Zia, executive director, advisory, retail and hospitality, at Knight Frank India. “With so many regulations coming in to cleanse the whole real estate industry, to bring in transparency, systems, processes and professionalism, Indian realty is on its way to become an equitable industry where the buyers and sellers have same or equal rights.”

Beyond their impact on real estate and the local economy, the reforms are also strengthening India’s standing globally, making the country more attractive to foreign investors. “Be it Rera, GST, REITs, affordable housing or the sustained focus on infrastructure, this is one of the best times this sector has ever seen,” says Vikas Oberoi, chairman and managing director Oberoi Realty.

The motivation to invest in Indian realty is driven by both competitive current prices and strong long-term growth potential. Indeed, the policy reforms seem to have further extended the subdued performance of the real estate sector, which has been the norm over the past two years. But industry experts believe this is only part of the obligatory short-term pains.

“Obviously, any such impactful introductions bring in lots of disruptions and that exactly is what we have been going through right now,” says Oberoi. “This is that disruption period where there is a temporary pain and this pain currently is huge for developers. But we all are very hopeful that when the dust settles, we will have absolutely a heavenly industry for all of us to survive and transact in.”

Much-needed reforms

After earning a bad reputation for being highly unorganised with no transparency and accountability for years, India’s real estate reforms were long overdue. “The system until recently was impervious with regards to price, construction delay, construction quality, ownership title and litigation,” says Amit Wadhwani, director of Sai Estate Consultants.

With these new policy reforms coming into play one after another, the industry is surely expected to see a lot changes in the way of doing business, which will not only improve the experience of buyers but also impact the pricing of projects.


The Rera, for instance, is expected to bring in a sea change in the way the developers market their projects, make promises and deliver their products.

“The implementation of Rera has transformed the modus operandi of the Indian realty sector, making it an investor-friendly market. The infused transparency and accountability has further improved the market sentiment and allowed us to build a long-standing relationship with our buyers,” says Navin Makhija, managing director of Wadhwa Group, an exhibitor at the three-day Indian Property Show, which opens tomorrow in Dubai.

With the introduction of this act, homebuyers can now log into the Rera website and get information about a project’s status, sanctioned plans, agreement draft, inventory status, approval status and any litigation about project. “This gives buyers much more clarity before they finalise a deal,” says developer Rajesh Lifespaces in a statement. “In the long term, it will help customers track delivery capabilities of developers and make decisions accordingly,”

The Rera has made it mandatory for developers to give greater levels of disclosures to the real estate buyers. There is also an escrow mechanism in place to retain developers’ funds in the same project.

Although the national government is pushing for state-level implementation of Rera, Wadhwani points out that some states are yet to implement the act. “India has a total of 35 states and union territories, excluding Jammu and Kashmir, but as of August 1, only 23 states and union territories have already notified rules and have set up interim or permanent authorities.”

Zia agrees that so far there have been half-hearted attempts towards implementing Rera in some areas. “Maharashtra is the only state that has been implementing the Rera the way it was approved in the Parliament, in letter and spirit,” says Zia. “Of course, the other one which is doing it is Madhya Pradesh but that is a very small market.”


The Indian government in November last year took the decision to scrap high denomination banknotes, a move that was initially thought to have a far-reaching and immediate effect on the capital-intensive real estate sector. However, the industry seems to have overcome the effects of demonetisation, with minimum impact on pricing.

“The property prices have not been impacted by this move,” says Ashish Ganeriwala, head of the department, marketing and HR, at Siddha Group, adding that reputed developers are not greatly impacted by the move. “People are now gradually choosing digital mode of payment, which has helped in eliminating unethical elements from the transaction process.”

However, Zia points out that the move has not entirely eliminated the black economy from the real estate sector. “Even today there exists enough of cash in the industry, although it has reduced for sure. In terms of actual physical cash, perhaps you have the same amount as it was before demonetisation. So the currency notes have changed but the situation on the ground has not entirely been as per expectation.”


Another fear among the buyers and industry stakeholders was that introduction of GST, which many though could lead to rising construction costs and property prices. However, with the facility of input tax credit, which developers can claim on tax paid towards input materials, GST has had very little impact on construction costs.

“Although the situation is still fluid, and the government is still ironing out the creases, the impact of GST on ready apartments with requisite approvals is nil,” says Oberoi. “However, under-construction projects may observe a marginal increase in prices depending on the segment and the location.”

Industry players are of the opinion that the GST has helped bring uniformity in the tax structure in the country. “It has helped ease doing business, and we welcome the move,” says Ashwin Sheth, chairman and managing director of Sheth Group. “The current rate levied on real estate is 12 per cent, which is exclusive of stamp duty plus registration charges.”

However, the industry bodies are still waiting for some more clarity on GST, for which they have approached the concerned authority to make amendments to the tax structure concerning the sector.

Good time to buy?

With prices still falling, industry experts say it is definitely a good time to start exploring Indian real estate.

“For NRIs who wish to buy property in India, there could not be a better time, as for residential and commercial properties no special permissions or lengthy procedures are needed anymore,” says Oberoi.

For the next couple of months, or at least for a quarter or two, Knight Frank estimates prices to continue to fall down, if not remain stable. “Delhi in last two and half years has seen almost 25-30 per cent reduction in property prices,” says Zia, adding that the industry is looking very good today for end users. “For Mumbai, 10-15 per cent is the norm, but with recent concerns or distress, developers in a few projects have started offering 20-25 per cent discounts. With that becoming a norm, even Mumbai will not be far away from the 25 per cent bracket. The other markets have already seen 10-15 per cent price correction.”

While the current measures have resulted in property prices falling in the range of 15-25 per cent in some markets, the number of new project launches has also come to almost zero amid unsold inventories in key sub-markets, including of Mumbai and Delhi. Although prospective buyers are celebrating the price correction, market observers warn this may not be good for the industry in the long run as the forced blockage to new launches could create a demand-supply mismatch, resulting in prices skyrocketing.

“Let’s face it, developers are also suppliers. What they are not starting with today will come back to haunt the buyers after three, four or five years when that supply, which was supposed to start construction today, should have been ready,” says Zia.

However, for property buyers, especially end users scouting for better deals, this is possibly a good time to buy. They not only have better bargaining power and a wide range of rightly priced projects to choose from, there is also a more transparent environment, with new bodies like Rera at their disposal to address grievances.