CMD, ATS, & Chairman, Credai National
The year 2017 can be summed up as a ‘Year of Change’ with lots of policies coming in. It also sent a very clear signal to the industry that only those who have an organisation behind them would be able to operate in the future considering the number of compliances that need to be adhered to.
Therefore, I think, in 2018 we will see fewer players, but only the more serious ones who are experienced and who have got a good track-record. In fact, you will see them scaling up their operations in the New Year. After the inventory which is still pending in the market has been taken in, the supply in all geographies will reduce as the number of players will reduce.
On the other hand, there will be a good traction in sales in the fourth quarter. The first quarter would witness a reasonable traction with a slight increase in prices in certain geographies. From Q2 and Q3 onwards, we expect the real estate to do quite well.
We must not forget that there is a documented shortage of housing. Considering that a lot of affordable housing stock is also coming up, the market will see regeneration. There will be a buzz in real estate purchases and housing loans would be more aggressive and competitive. The buyer would be the king and finances would be available abundantly to both the developers and the end-users.
- In 2018 we will see fewer players, but only the more serious ones who are experienced and who have got a good track-record.
- The first quarter would witness a reasonable traction with a slight increase in prices in certain geographies. From Q2 and Q3 onwards, we expect the real estate to do quite well.
- We expect some practical changes in certain provisions of the Income Tax Act so that the real estate activity can become more robust and developers are encouraged to operate in smaller towns.
- It won’t be right to say that some builders would be shutting shop in the days to come because ‘shutting shop’ is a very negative term. But, consolidation would surely happen in the year before us.
We expect some practical changes in certain provisions of the Income Tax Act as far as the real estate goes so that the real estate activity can become more robust and developers are encouraged to operate in smaller towns. Right now, the incentive in smaller towns is not very attractive. The industry will also then understand that the focus should not only be on the seven metros but the opportunity is there in the entire country.
Things will improve once these changes are made in certain parts of the Income Tax Act, for example in 80 I (B) 10 where they are giving income tax exemptions only for up to 60 square metres. The industry would be happy if the size is increased to 90 square metres, and for smaller destinations the cap or the minimum achievement of FSI is removed, because in smaller destination it is not an FSI game, where low-rise developments sell. High-rise does not in Tier-3 and Tier-4 towns. The MAT in 80 I B should also be removed, only then will it be attractive for organised real estate developers to venture into these destinations.
As far as ATS is concerned, we have already ventured into smaller towns and we are going to be very aggressive there now. Right now we are concentrating on cities in the northern part for expansion.
Also, we have formed a company for affordable housing. The brand is called Home Kraft. You will see some launch happening in this space by Home Kraft, where we would be offering apartments of 1,600 square feet and below. We will start with the NCR and keep expanding to other towns.
Though right now it is difficult to comment on the price range of these units as we are working out various things, there is no doubt that it will be a very attractive product. A formal announcement in this regard can be expected by the end of Q4 FY18.
The year 2018 would also see consolidation and the format of consolidation would be a win-win format. It won’t be right to say that some builders would be shutting shops in the days to come because ‘shutting shop’ is a very negative term. But, consolidation would surely happen in the year before us.
I am also of the opinion that the prevailing turbulence will settle down in 2018. In fact, it has already settled down to certain extent, because deliveries have started happening. One would see a lot of deliveries happening in the Q4 of this fiscal. A few companies where the problems are very complex may not see immediate solution. But the good thing is the Government is working with the industry to sort out these ‘complex issues’ and I’m optimistic of a solution.
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