RERA and GST slow down launches of new projects

PUNE: The real estate sector in the city has suffered a setback with new launches nosediving by nearly 67% following the announcement of demonetisation and implementation of RERA and GST.
This was revealed in a report released by a pan-India property consultant group on Thursday. Pune was followed by Bengaluru and Hyderabad, recording 64% and 57% drop in terms of new project launches, respectively.
The report showed an annual decline of almost 50% in new launches and 15% in sales across top 7 cities in the country.
The Mumbai Metropolitan Region (MMR) could sustain the new regulations and topped the chart with a fresh supply of units (38%), followed by NCR (18%) Bengaluru (13%) and Pune (11%), revealed the Anarock Property Consultants report.
The report added that the top 7 cities — MMR, NCR, Bengaluru, Pune, Chennai, Bengaluru and Hyderabad — saw 1.26 lakh new launches in 2017 as against 2.50 lakh in 2016.
“A spate of policy reforms and structural changes literally crippled the sector,” said Anuj Puri, chairman of the consultant group.
The report stated that the developers have got back to new launches slowly and allowed the market more scopes to absorb the staggering unsold inventory.
It added that the developers across the country remained on the backfoot in 2017 because of a series of “highly disruptive reforms”, coupled with mounting unsold inventory and stringent RERA norms.
Instead of infusing new supply in the market, the report stated, the developers focused on executing the under-construction projects to remain RERA-compliant and relevant in the rebooted market scenario.
Almost a similar view was shared by Confederation of Real Estated Confederation of Real Estate Developers Association of India (Credai) national president Jaxay Shah. He had said that the industry has displayed “extreme resilience throughout the course of the past 18 months” and that the sector, at present, was slowly moving towards an upward trajectory.
Prices across the top 7 cities remained largely range-bound in 2017, primarily due to the presence of the significant unsold stock and cautious buyer sentiments. In 2017, the market clearly made a shift towards the affordable housing segment, with 44% of unit launches (55,000 units) coming with price tags under Rs 40 lakh.
The sales in the real estate sector plunged by over a third, while the new launches came down by 64% in the three-month period from October to December 2016 as against the same period a year ago.
A study by real estate consultancy firm Knight Frank also revealed the drop in transactions post-demonetisation. Knight Frank had in July 2016 predicted that the second-half of the year would see the the Pune real estate market bouncing back.