Why Indian Real Estate Developers are focusing on AFFORDABLE HOUSING?

Developing affordable housing projects are eminent today for India's developers as there is so much of real requirement in this segment. Actually none of the private developers ever developed houses in this segment because of low margins & lack of subsidies etc.., Most importantly the end users now realised that under 50 lacs they are not getting any luxury or standard of facilities they booked through jazzy brochures, The reality check is far different from those show apartments at projects sites, both parties now are at the same page on what they will deliver & what they will get...Thanks to RERA... Modi government is determined to provide Housing to all & they are giving some support as well to the developers through new reforms in policies in order to achieve some % of this ambitious target. Moreover the sector got right on the chin at the announcement of demonetisation in November last year. Some experts felt that once the dust is settled on demonetisation, the real estate sector would revive on the back of correction in prices, more transparency in deals and another likely round of rates cuts by the RBI. However, the no actual revival in 2017.

After the launch of the 'The Real Estate Regulatory Authority' Act , which emphasise the need for timely completion projects, adoption of modern technologies has become the need for hour to survive in the market for the developers, construction of projects & delivery on time has become prime priority for developers. Most importantly the developers will now accept payments only in cheques because some key RERA acts thanks to GST buyers will also prefer paying in cheques only over the period of time. The overall scheme of things will promote Affordable Housing in current scenario. The impact of recent reforms on housing sector is to keep cost low for the affordable housing segment as measurements of the housing units have been specified & made this scheme more attractive, ensured homebuyers get value for money.

GST will bring down the cost of construction for the developers, but it remains to be seen whether it will benefit the consumer or not. Global investors are now looking at the Indian Real Estate sector as an attractive proposition as the prices of property's have fallen by 25% in NCR and rates are likely to further remain stable in the short-term. In the long-term , GST is likely to be positive for the Real Estate and is expected to ensure ease of doing business in India become Tax Neutral, irrespective of the location.

The Finance Ministry has made it very clear that there should be no addition tax burden on consumers. Developers who did not get the benefit of ITC(Input Tax Credit) in the pre- GST era will now be able to avail it. Both in case of under construction projects, and new projects buyers are entitled to full ITC. It would also add another strategic push to affordable housing which in turn will be the recovery of residential sector.

This guest post has been written by Gunjan Johar, Real Estate Blogger.