The real estate sector in India is one of the most promising industries where investors from various age groups take active participation. But there has been a tectonic shift for the property investment in India as new regulatory norms, NBFC crisis, and taxation regimes are becoming the game changers. This has called for re-calibration of invest policies after the real estate market has seen a boom from 2011-2016. During this phase, the real estate sector received an annual return of 6.2% from the stock market and 3.6% from gold. This was a lucrative opportunity for the hot money owners who saw a promising future in investing in purchasing property in India. The developers even used this opportunity to receive customer advanced by selling projects at pre-launched stages and using the customer money for approving the project. New developers started entering in this market; farmers sold their agricultural lands and investors had received an unusual return.
But everything went topsy-turvy with the onset of the macro environment that has made several developers go bankrupt. With the introduction of RERA and demonetization, and the recent NBFC crisis have led to further liquidity squeezing for the realty developers. As such the residential real estate projects are going through a bad phase as funding will inevitably increase shortly. So going forward individuals can expect the following shift in the pattern for the rapidly developing real estate market.
Preference is given to the commercial sector than residential projects:
After the levying of new taxation scheme, it is expected that developers will keep a distance from residential projects which will limit their price appreciation. They will eventually venture for commercial projects where the rental yields would support the return on investment. It is seen that realty developers earn 2-3% revenue from residential projects while from the commercial project they get nearly 9-10%. Unlike the yields from commercial sector droops, developers will remain inclined towards commercial projects.
Residential property investment should be done only by end users:
Those are looking for purchasing the property from online property sites in India, should hold on their decision if they don’t plan on staying there for a long-term tenure. This is because the end users who are just looking at a house like an asset has to bear enormous cost of purchasing and maintaining it. As such there will be no return value as these residential projects will now be kept under check.
Renting the house is a primary option:
Individuals who are away from home for a long span should consider renting their apartments. This is because the revenue earned from rent will reduce the subsequent amount of maintenance charges.
Customisation of the product by developers:
With the ongoing trend in the real estate market, developers should pay more heed to the end user's preferences in terms of social infrastructure, price, construction quality, location, and unit size. Residential projects which come under affordable range and are located at a strategic point will become more in demand. The real estate consultants in India should, therefore, advise individuals who search for property buying sites, to look for houses that are preferable for long-term living.
