The year 2017 has been a very important for the Indian real estate sector. The promulgation of the Real Estate Regulatory Act (RERA) has made builders and developers more accountable than ever before. The benefits of RERA have reduced project delays and protection for homebuyers.
A major positive from the Act is that, it has forced real estate players to become more transparent in their business, especially planning and pricing as well as better execution and timely delivery.
The Act has also increased investment into the sector with capital flowing into multiple segments including residential and commercial as well as warehousing and logistics. Naturally, these developments have also bolstered the confidence of potential customers who are once again looking to invest in real estate.
I believe that in 2018 and beyond, the industry will be influenced by disruptive policy initiatives such as RERA and Goods and Services Tax. This is evident from consolidation in both the developer and financing segments. Real estate development will no longer be a minimum capital-high return-low governance model.
The more established players in the market will grow from strength to strength, edging out smaller developers in the process. The post-RERA era will also see housing finance companies help achieve overall financial closure for projects as they enable end-user sales.
Only those finance providers who can provide early-stage equity, ongoing construction debt and late-stage completion finance will be regarded as financiers of choice, while others focusing on one or two verticals within the capital stack risk seeing their market share erode further.
Writer’s Profile:
Khushru Jijina, Managing Director – Piramal Finance Limited and Piramal Housing Finance Limited, Piramal Enterprises
Jijina is a Chartered Accountant with an illustrious career spanning well over three decades in the field of real estate, corporate finance, and treasury management. He has been with the Piramal Group for over 16 years.
Disclaimer: The views and opinions expressed in this article are those of the writer and do not necessarily reflect the views of The Banking & Finance Post.
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