Notwithstanding some headwinds due to recent changes in the regulatory environment for the real estate sector, including the implementation of RERA and the upcoming GST regime, National Real Estate Development Council expects the country's real estate sector to pass through a transitory phase leading to consolidation.

“Naredco, as the apex body of real estate sector under the Union Government, has been articulating some of the sector concerns and hopes they get resolved so that we will see a sustained phase of growth in the housing sector,” Parveen Jain, President, Naredco, said.

‘Tough business cycle’

Jain told BusinessLine that the sector has passed through a tough business cycle over the past 24-30 months and from a regulatory environment too a number of changes have been brought about, all aimed at accelerating the growth of the sector.

“However, we have been interacting with the government and representing to them about some of the concerns. If they get resolved, we are in for a much sustained growth over the next few years,” he said.

“Overall, the market sentiment is better now compared to few quarters ago. The recent changes brought about with RERA, wherein they need to have 70 per cent in Escrow account, the developers will have tough time but the home buyers will be a happy lot,” he said.

“If developers have so much funds, then they will complete the project anyway,” Jain said. Jain said that while the GST regime, which will subsume more than 16 major taxes and levies into a single tax, will bring about a positive momentum for the growth of the country's real estate sector. However, the provisions relating to the affordable housing segment needs to be re-looked into, especially with the government aim of Housing for All by 2022.

In the GST regime, the mid-segment is not likely to be affected much but it might have a major impact on the premium segment as also affordable housing segment. The latter has to contend with the 12 per cent slab.

The reforms brought about in the sector augur well as they will bring in transparency. While old projects will face some problems, there may be some delays in taking up new projects as developers may want to see the RERA and GST implementation getting streamlined. In a number of states, RERA is still some way away from implementation.

Price movement

On the prospects of price increase, Jain said, “It would not be right to comment on the way market would go in the near term and long term. But we believe the market is right for new home buyers as the environment is ideal, and the recent tax benefits too add to the home buyers’ advantage.”

The reforms, he hoped, would also bring down speculation in real estate market.

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