More adaptability to reforms likely, Govt policies key to sector’s revival

Deepak Kapoor
Director, Gulshan Homz

The year 2017 was a mixed bag where we went through good and bad times. Certain things happened which were not very conducive to the business.

Though 2017 was a year of tough times for the real estate sector, we at Gulshan Homz wrapped the year very comfortably. While the industry was reeling with possession issues, we at Gulshan Homz successfully handed over possession of all our three on-going projects in Noida – Homes 121, Ikebana and Vivante.

At Homes 121, we started possession two-three years ago, we completed the possession this year and around 80-85 per cent people are staying there now. In Vivante also, the occupancy is more than 90 per cent. In our Ikebana project, we have successfully handed over possession of 750 units, out of which around 350 families have moved in.
So for us, 2017 made us feel proud as we successfully provided housing units to our buyers. We have delivered close to four billion square feet of real estate in more than four years and we plan to do similar in the next three-four years.

We have also decided to diversify into more segments now. Besides mid-segment residential market, Gulshan Homz will foray into commercial segment. We are coming up with the concept of high-street shopping centres, which will also have office spaces. We will also be setting up our banquet and hospitality vertical whereby we will be focusing on exhibitions, conferences and events, etc., which is a very large segment. These convention centres will have four-star supported hotels. The first such project in Noida Expressway will be launched in 2018 and shall be completed in 2019. We are in talks with many hospitality groups for tie-ups.

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In 2017, we saw two major reforms, RERA and GST, both of which are welcoming. The industry has accepted these wholeheartedly. They will undoubtedly bring about positive changes in the long run. But whenever anything new comes, any new reform happens, there are always implementation and adaptation issues, teething problems. As time passes, everybody through experience understands, adapts to and implements the reform. Both Gulshan Homz as well as the industry have taken these reforms positively.
In 2018, we expect to see more adaptability to these reforms. The sales have also been impacted due to these reforms, as people were not having much clarity. As awareness increases with time, we expect sales to pick up.

GST acted as a negative impetus initially, as post-GST people had to shell out more money for the same property, than what they were paying during pre-GST days. For near-completion projects, one has to pay 12 per cent GST as compared to 4.5 per cent service tax they were paying earlier. There was some misconception arising out of miscommunications that developers cannot pass on the GST to the buyers. There is no such mechanism to waive the charges.

• Though 2017 was a year of tough times for the real estate sector, we at Gulshan Homz wrapped the year very comfortably.
• We have delivered close to four billion square feet of real estate in more than four years and we plan to do similar in the next three-four years.
• We have also decided to diversify into more segments now. Besides mid-segment residential market, Gulshan Homz will foray into commercial segment.
• We have also decided to diversify into more segments now. Besides mid-segment residential market, Gulshan Homz will foray into commercial segment.
• GST acted as a negative impetus initially, as post-GST people had to shell out more money for the same property, than what they were paying during pre-GST days.
• Revival of the real estate sector in 2018 depends upon Government policies. If the policies are conducive, the industry shall revive and grow in 2018.
• RERA will bring in positive changes, as the industry will move towards regularisation, which in turn will revive the confidence of the buyers.
• The year 2018 will also see some shake-up, there will be shifting of customer alliance towards those developers who have a very strong record of delivery.
• Post-RERA many of the developers whose core competency is not developing real estate, will be out of the market, which will result in handholding, mergers and acquisitions etc.

Some people are saying that there is an input credit, so why the developers are passing on the GST to the buyers. Now input credit varies as per the stage of the construction. We get a very good input credit if the project is at a starting stage. As the project proceeds towards completion, the quantum of input credit reduces. Also post- completion there is no GST, which is also acting as a barrier for the sales of properties which are under construction and nearing completion. Prospective buyers are putting on hold their buying decisions, as they will save 12 per cent if they buy after few months when the project is complete, and no project is going to appreciate by 12 per cent in a short span.

We have been appealing to the Government through Credai to get this anomaly removed. We have made presentations and series of meetings to this regard to the GST Council, the Housing and Urban Affairs Ministry as well as to the Finance ministry. Revival of the real estate sector in 2018 depends upon Government policies. If the policies are conducive, the industry shall revive and grow in 2018.

It has been four years that this sector is performing badly. There are various reasons for this, one is non performance of many of our fellow developers, even some of the stalwarts of the real estate sectors have performed badly, secondly, market sentiment were also not good. But RERA will bring in positive changes, as the industry will move towards regularisation, which in turn will revive the confidence of the buyers.

There is a deficit of housing, which means the demand is already there, only the sentiment is missing. Once the sentiment turns positive, buyers will come back to at least those developers who have a known track record of on-time delivery. The year 2018 will also see some shake-up, there will be shifting of customer alliance towards those developers who have a very strong record of delivery.

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The year will also see consolidation within the industry. Post-RERA many of the developers whose core competency is not developing real estate, will be out of the market, which will result in handholding, mergers and acquisitions etc. The consolidation process has already started and will continue not only in 2018, but also go on in 2019 as well.

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