Trends those are likely to shape the real estate market in 2020

2019 was a relatively challenging year for Indian real estate, which faced a slowdown in the sector. Nevertheless, the recession made Indian developers aware of where they stand and the drawbacks are to blame. As a result, industry experts expected, in 2020, to adapt to several changes in terms of preference, demographics, technology and policies, in a bid to boost buyer sentiment and promote affordable housing sales.

Even with the slowdown in the sector, sales showed some signs of improvement in Q3 and Q4 of FY19, due to redemptions made by developers in their product offering, based on an understanding of consumer demand. New age developments are more suitable for millennial, which are actually the target group of many affordable housing developers,” says Dinesh Doshi, Managing Committee Member, CREDAI MCHI, Raigad.

Top Realty Trends in 2020

Real estate to operate the end user

The market is becoming increasingly end user driven. “While the number of real estate investors is already small, this segment is shrinking further. In the coming year, it seems that almost all of the demand will come from end users, with the supply of products targeted primarily to them, says Mayur Shah, Managing Director, Marathon Realty.

Demand to increase compact housing, co-working and commercial space

The demand for 'compact housing' is likely to increase a great deal across the country. In different regions, homes whose price is right have the potential to elicit good feedback from consumers. Developers will address this challenge, going further,” says Shah. The healthy demand for co-working spaces seen in 2019 is likely to continue until 2020. The growth of the commercial real estate segment, which is attracting foreign investments, will also help in improving the economy.

Heavy Dependence Technology

New-age customers rely heavily on technology and social media as they enter the housing market. Thus, it will become imperative for developers to adopt and leverage technology, to engage with customers, to enhance the experience at every point of view and to create positive perceptions about the field. Adoption of technology will also increase efficiency, quality and transparency, which will lead to change in the sector, ” he explains.

Challenges facing real estate in 2020

The industry is seeking support from the government, to overcome some challenges and to emerge from the recession. While the government has taken several steps so far, continuous reforms are necessary in many key areas.

·     Industry status and single-window clearances

·     Funding from banks

·     Financial bailout

·     GST burden and input tax credits

·     High stamp duty charges

·     Home loan interest rates

Impact on Indian Housing Market due to COVID-19

Corona virus proliferation has further delayed a recovery that may be due to measures launched to revive various government demands, however, it does not appear that prices will fall immediately. Niranjan Hiranandani, national president, NAREDCO, says that "reviving Indian realty is the second largest employment generator, not only from the point of view of GDP growth, but also for job creation as the multiplier effect of more than 250 affiliated industries in the region is.

Recently, the Center announced more tax breaks and lower interest rates on home loans to make purchases more attractive, besides setting up Rs 25,000 crore stress fund for speculation.

He called for a slowdown in the residential segment, which has already stalled housing sales, project launches and price increases in India's residential realty sector, which is under pressure due to mega regulatory changes due to Real Estate Regulatory Authority (RERA), Goods and Services Tax (GST), Demonetization and Benami Property Law.

According to rating agency ICRA, the epidemic, if not soon included, will not only significantly affect the economy, but will adversely affect the cash flow and project delivery capabilities of developers.

"Although in the case of a prolonged outbreak, the impact on overall economic activity is likely to be deeper and more sustained, resulting in a more significant impact on developer cash flow and project execution capabilities, leading to a wider credit negative impact." ICRA said in a recent note that the three-month deferment announced by the RBI on loan on March 28 would provide some comfort to the builders.

“The injected liquidity of Rs 3.74 lakh crore (by RBI) with a three-month moratorium on all loans by financial institutions will ease short-term liquidity concerns and help developers as well as homebuyers. It is a great relief for developers and buyers to help ease the challenges they currently face,” says Ramesh Nair, CEO and Country Head of JLL India.

Anticipating the delay in completion of the project and supporting the builder community, the Real Estate Regulatory Authority in Maharashtra has announced a 3-month extension in the completion deadline of the project.

Recall here that real estate developers in Mumbai, the state capital and India's financial nerve center, have the largest selling stock in the top nine markets.

“Due to the 21-day lockdown outbreak of COVID-19, both manufacturing and sales activity has come to a complete halt in the entire real estate sector. At many sites, construction workers have also moved back to their hometowns. Even after the lockdown, the activity will only recommend slowly, which will cause project delays anywhere between at least 4 to 6 months,” said Sharad Mittal, CEO and head, Motilal Oswal Real Estate Funds. Welcoming the announcement of Maharera, Mittal said that although it cannot fully compensate the sector with actual project delays that are likely to be direct, 'it is certainly a decision in the right direction, to support real estate developers and the region. Overall in this global crisis.

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Rates of Ready Reckoner or Circle Rate

What do you mean by Ready Reckoner rates?

In order to avoid deception of stamp duty within devaluation for arrangements and agreements, and to minimize collisions on the amount of stamp duty, all state governments issue area wise prices of properties on an annual basis, as ready reckoner rates is recognized.

Importance of Ready Reckoner/Circle rates?

Ready Reckoner (RR) rate, as accounted for in Mumbai, is also recognized as a circle rate in Delhi. This fee is an estimate of government property values ​​in many places. The rate varies in each state, city and many areas in those cities. Officers define the cost of real estate in a suitable area based on various circumstances. Based on these circumstances, a benchmark is established below which no property transaction can take place in that appropriate locality. This benchmark is identified as the ready reckoner / circle rate. This is the must charge on which the government will impose stamp duty and registration fee.

RR rates are generally lower than modern market rates for properties in a certain area. The rate assessment is organized and updated to bring it closer to market fees. As real estate deals take place in the individual sector and the price does not usually appear, state governments need a benchmark to assure that they do not miss an essential reference to resources.

Is Ready Reckoner rate affect real estate transactions?

While RR rates specify the minimum price at which assets can be sold in an area, there is no ceiling under which assets cannot be sold. This indicates a significant variation between RR and market rates. Most of the maximum assets in India are in a select area in a suitable position based on market rate. Stamp duty and registration fees, to be paid by the home buyer, are measured at the foundation of this market rate.

Consequently, the huge variation within the RR rate and market rate leads to a lack of resources for the government. In exceptional circumstances where the RR rate is more important, the stamp rate and registration fee will be estimated at the RR rate.

On the other hand, higher RR rates prevent home buyers from registering their homes. By systematically reviewing RR rates and producing them close to market prices in each locality, state. The government can increase transparency in real estate transactions and also assure that they do not incur losses on revenue.

The important of Ready Reckoner rates for home buyers

The RR rate of properties in a suitable area is a bottomless implication of the importance of money that an essential home buyer must exclude. The market rates of homes in an area are almost huge and property prices tend to increase directly when there is a demand for improvement in the RR rate. It is also beneficial for buyers to purchase a property in an area where the difference between RR and market rates is comparatively smaller, especially if the purchase is being financed by a home loan.

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