The Indian real estate industry is currently witnessing a positive transformation in terms of growth and development within the infrastructural, residential and commercial areas. The policy changes enforced on macro level has successfully transformed the real estate sector into one of the most suitable and secure options for investments. Reforms like Real Estate Investment Trusts (REITs), Goods and Services Tax (GST), Real Estate Regulatory Authority (RERA) among others have consolidated the real estate segment and have brought transformative changes to the sector. It has led to accountability, transparency and efficiency in the sector.
The favourable market conditions have instilled confidence amongst the global investors of getting definite returns on their investments made in the Indian real estate industry. Foreign investors have now started understanding the Indian regulatory and taxation environment along with the demand in the sector and the nature of currency risks.
The recently introduced REITs listing, which made investment in real estate reliable, has received a humongous response. Like mutual fund investments, REITs are investments in the form of shares in the real estate market and thus more liquid. Emergence of REITs has provided the retail investors access to high-end and large properties that were previously held as reserve for the Ultra High Net Worth Investors or institutional investors only.
Investments in REITs are mainly in the commercial properties that otherwise demand large amounts of reserves. The investors receive their income in the form of dividends through the rentals paid by the tenants. In the near future, transparency in the dynamics of the Indian REITs market is expected to pave way for improvisation in the maintenance and operation of assets, further promoting professionalism in the real estate segment. This is likely to reduce speculation in hard assets, which is difficult to manage and less liquid.
Another policy that has been implemented in the interest of the consumers and the real estate developers is the GST policy. Since July 1, 2017, the GST has helped streamline the real estate sector. Transparency and decision-making process for home-buying has now been simplified and has further increased the demand for residential and commercial spaces. The real estate investment is now viewed as a profitable source of returns due to the improved taxation benefits that additionally assists in reviving the sector as a whole. The concept of “One Nation, One Market, One Tax” has evidently been in favour of the real estate sector.
The deployment of such helpful and progressive policies is sure to help the Indian real estate sector and make an impact on the global forums.
(The author is Chairman, FICCI Real Estate Committee & Managing Director and Chief Executive Officer, Tata Realty & Infrastructure Ltd)