10 Things You Should Know About Election’s Impact on the Real Estate Sector

During general elections, the real estate sector tends to slow down; there are fewer launches, and investors prefer a ‘wait and see’ approach. However, end-users may not be directly impacted, as they may decide to purchase a house when they find the right project in the market and the best deal that suits their pocket. 

When uncertainty surrounds election results, real estate investors become cautious and anticipate potential policy changes. According to experts, there are fewer transactions and new launches during elections, and investors’ decisions may be influenced by market sentiment, share market performance, and even the impact of exit polls on markets. 

Elections 2019: The Impact on the Real Estate Market

During its first term (2014), the government accelerated infrastructure development by implementing major policy overhauls such as DeMo, RERA, and GST, amending old Acts such as the Insolvency and Bankruptcy Code and the Benami Transactions (Prohibition) Act, and launching schemes such as 100 Smart Cities, Housing for All by 2022, Make in India, and AMRUT  Cities.  According to experts, the last five years (beginning in 2019) have seen the overall impact of their implementation on the real estate sector.  

Also, during the 2019 elections, the primary and secondary markets slowed, and aspiring buyers and investors chose to wait and see. The momentum increased following the results, and buyers and investors were reassured of the government’s commitment to building new infrastructure. 

It should be noted that India’s residential real estate sector experienced a significant slowdown from 2016 to 2019. The major market shake-up caused by policy reforms between 2016 and 2017 led to the NBFC crisis after the IL&FS issue in 2018. This created significant turmoil in the residential real estate industry. 

According to Anarock Research, enough evidence suggests that housing sales and new launches may peak again in 2024. 

Price trends for the last three elections 

Examining price trends over the last three election years reveals that 2014 was better than 2019. According to ANAROCK data, average prices in the top 7 cities increased by over 6% in 2014, rising from Rs 4,895 per sq. ft. in 2013 to Rs 5,168 per sq. ft.  In 2019, average prices increased by only 1% per year, from Rs 5,551 per sq. ft. in 2018 to Rs 5,588 in 2019. 

Impact on Homebuyers 

While it is true that many prospective homebuyers are waiting for the elections to be over before making a purchase, experts point out that end-users will be unaffected by any such factor and will buy a home as soon as they find the right product on the market. 

Only investors will wait and see. Elections affect market sentiment but have little impact on end users. So, suppose a buyer finds a property that is populated. In that case, infrastructure has already developed, the price is right, and all of the fundamentals are in place, election or no election, he is obligated to buy it,” said experts. 

According to Anuj Puri, Chairman of the ANAROCK Group, elections frequently signal the end of fence-sitting and a confident move to ‘buy’ positions for homebuyers. 

The elections may impact markets where investors are the majority and speculators dominate. 

Investors who intend to make ‘aggressive’ real estate purchases may prefer a ‘wait and watch’ strategy, but homebuyers will continue to buy based on their needs. According to experts, an investor’s decision today may be influenced by market sentiment or the ‘feel good’ factor, capital market performance, and whether the new government’s emphasis on infrastructure development will continue. 

Elections also have an impact on builders. “During elections, the number of new launch announcements is often reduced because approvals may not be received due to the code of conduct. According to an unnamed developer, several projects in multiple categories, including mid-segment, affordable, and luxury, could be launched in the coming quarter. 

How will the election results affect the real estate market? 

A healthy absorption-to-supply ratio of 1.02 in 2022 rose to 1.17 in Q1 2024. According to the data shared by Anarock, controlled launches, and increasing sales, particularly in the high-end and luxury segments, have resulted in a drop in unsold inventory and a rise in prices. 

“The residential real estate segment will probably reach a new high in 2024. This also suggests that home buyers are optimistic about the real estate market’s performance,” Puri explained. 

Will there be an increase in the number of new launches after the 2024 elections? 

In recent quarters, the residential real estate market in the top seven cities has set several benchmarks. Quarterly launches in these cities used to total more than 80,000 units per quarter in 2022. In recent quarters, the residential real estate market in the top seven cities has set several benchmarks. Quarterly launches in these cities used more than 80,000 units per quarter in 2022.  However, it passed the 1 lakh unit mark last year, with launches exceeding 1 lakh in the previous five quarters. According to Anarock Research data, major developers have already acquired land for future development at a rate that is 125% higher than in 2021. 

As of March 2024, unsold inventory had dropped to less than 6 lakh units, with an inventory overhang of only 14 months, down from 21 months a year earlier. 

Will these new launches be in the middle, top, or affordable segments? 

Launches in the mid-segment and higher-end have dominated accounting for more than 55% of the total supply. It is also noticeable that the share of luxury and ultra-luxury segments is increasing, accounting for nearly 25% of the total supply as of Q1 2024. “The new launches will primarily target these segments,” Puri explained.

Signature Global (India) Limited’s founder and chairman, Pradeep Kumar Aggarwal, believes that future launches will span all segments. 

Will future housing prices be stable or increase? 

Reducing unsold inventory, sales exceeding supply, and rising input costs are the key ingredients that will likely drive prices in the future. “We have already seen annual price increases ranging from 10% to 32% in various cities,” Puri said.  

Should homebuyers decide whether to buy now or wait? 

Unless homebuyers are looking for a luxury or high-end product in their preferred location, built by a preferred builder, or with a specific layout, view, or orientation, the average homebuyer should carefully evaluate the available options and close the deal by negotiating for the best offer. 

Impact on Commercial Real Estate 

The country’s expected GDP growth of $3.5 trillion to $7 trillion by 2030 can be sustained without significant changes in circumstances. “This sustained economic expansion will increase India’s appeal to global corporations, cementing its position as a prominent hub for establishing Global Capability Centers (GCC) and manufacturing facilities. Knight Frank India Chairman and Managing Director Shishir Baijal said growth significantly impacts the construction sector and improves employability.

Rental housing and affordable housing 

A persistent decline in affordable housing demand is one of Baijal’s hopes for the new government. Keeping interest rates low and other enabling conditions can help achieve this goal. “We hope the government will take a closer look at the policy for affordable housing and provide more incentives to the supply side,” he told HT Digital. 

Colliers report that foreign investors invest more than $4 billion in Indian real estate each year

Foreign inflows rebounded in 2023, rising 20% over the previous year to $ 3.6 billion. These investments went beyond traditional channels, expanding into alternative asset classes and supporting the strong growth in the domestic office, residential, and industrial segments. 

A favorable investment environment and rapid urbanization have established India as an attractive investment hub in the Asia-Pacific area because of its robust economy. 

As a result, numerous new funds are actively considering the market, while established global and sovereign funds such as Mubadala, Mitsubishi Fudson, PAG Credit & Markets, Cadillac Fairview, Korea Investment Corp, and PNB Malaysia are either increasing their investments or forming new collaborations to capitalize on the Indian market’s burgeoning opportunities. 

“2024 is expected to be a more dynamic year for both the Asia Pacific real estate markets and capital in the region, which will remain the dominant investor in global real estate. “The ability to act quickly, dig deeply into markets and sectors to identify value, and form productive partnerships will be critical to capitalizing on the region’s diversity and increased opportunity,” said Chris Pilgrim, Collier’s Managing Director of Global Capital Markets, APAC. 

Strong economic resilience, a favorable investment environment, and rapid urbanization have made India a highly desirable investment destination for international funds. 

With the International Monetary Fund (IMF) forecasting 5.7% GDP growth by 2024, India remains one of the world’s fastest-growing economies and a top choice among emerging Asia-Pacific (APAC) nations. Its appeal stems from attractive pricing, superior valuations, and promising yields for investors looking for profitable opportunities. 

Foreign inflows rebounded in 2023, rising 20% from last year to $3.6 billion. These investments went beyond traditional changes, expanding into alternative asset classes and bolstering the strong growth in the domestic office, residential, and industrial segments. 

New funds are expected to enter the Indian market shortly, maintaining investor interest. The residential, industrial, and alternative sectors expect renewed interest and income-generating office properties. 

“Investments in Indian real estate have been consistent in recent years, and they are likely to grow further as demand for capital changes structurally. Global investors have always been at the forefront, investing an average of $4 billion annually for the last five years, demonstrating their continued commitment and confidence in the sector. With an increase in performance credit, special situations, portfolio acquisitions, asset reconstruction, and related structures, the sector is expected to attract even more investment in the coming years,” said Piyush Gupta, Managing Director, Capital Markets & Investment Services at Colliers India. 

APAC countries show increased interest in Indian real estate. 

While the United States and Canada remain primary sources of capital, prominent APAC countries such as Singapore, Hong Kong, South Korea, and Japan are increasingly focusing on India’s burgeoning real estate sector. In 2023, investment inflows from the APAC region increased by 57% annually to $ 1.8 billion, with office assets accounting for 70%. 

Aside from office properties, APAC countries have shown interest in residential, industrial, and warehousing assets. The volume of investments has nearly doubled since 2019, indicating a significant increase in investor enthusiasm and confidence in India’s real estate sector. 

Looking ahead to 2024, investors are likely to become more involved in India’s real estate sector. This urge is driven by the country’s strong economic growth, favorable business conditions, and rising demand in numerous industries. The expectation of increased activity indicates confidence in the policy landscape, a narrowing gap between buyers and sellers, and investors’ eagerness to allocate more capital across various real estate asset classes. 

“In 2023, foreign investors accounted for 90% of all investment inflows into India’s office sector, demonstrating the strength of the underlying asset class. The industry is currently transforming. Furthermore, as sustainability becomes more important in investment decisions, the real estate sector, including India’s office market, is poised to align seamlessly with global Environmental, Social, and Governance (ESG) standards,” said Vimal Nadar, Senior Director and Head of Research at Colliers India. 

Indian REITs are expanding rapidly as office demand surges

With a market capitalization of $8 billion, three office REITs collectively own approximately 100 MSF of space, or about 12.5% of the total office stock. 

All metrics of office demand in India are showing positive momentum, and real estate investment trusts are rapidly expanding their portfolios through acquisitions. 

When Embassy Office Parks REIT was launched in 2019, it had slightly more than 24 million square feet. In five years, it has increased its completed area by 47%, adding 12 million to 12 million square feet through acquisitions. It now has over 45 million square feet of gross leasable area. 

The three office REITs- Embassy REIT, Brookfield India Real Estate Trust, and Mindspace Business Parks REIT– collectively own approximately 100 million square feet of office space, accounting for 12.5% of India’s total office stock, with a market capitalization of $8 billion.  

India’s office sector demand is growing by double digits. The monthly rental square foot is approaching the Rs 100 mark. Occupancies have risen to the mid-80s. Most significantly, globally capability centers have focused on India, with approximately 800 GCCs expected to be added over the next 6-7 years, increasing demand for offices. 

Acquisitions 

Embassy REIT acquisitions have primarily come from its sponsor, the Embassy group, based in Bengaluru, and all of its assets are concentrated in India’s IT capital. Last month, it arrived in Chennai with another acquisition from its sponsor, a 5 MSF business park that will take its total portfolio above 50 MSF. It also has a future development area of 2 MSF.

Brookfield REIT increased its operating area by 47% last year, primarily through acquisitions, and another 16% increase is expected following an acquisition announced last week.  

In FY24, it acquired 6.5 million square feet of space in the National Capital Region and Mumbai, and it plans to add another 3.3 million square feet by purchasing Bharti Enterprises’ 50% stake in a joint venture with its parent entity Brookfield. The REIT has the first right to offer the remaining stake, while other properties developed by Bharti Realty in Delhi are potential acquisition targets.  

Its parent, Brookefield, owns 54 million square feet of office space in India, which serves as an opportunity pipeline for the REIT. 

Last year, Mindspace REIT made two small acquisitions in Chennai and Pune, while also developing a mixed-use asset for its sponsor in Mumbai. It also has the right to first offer on other assets that its sponsor owns. Its sponsor, K Raheja Corp, has approximately 15 million square feet of pipeline in the form of completed or in-development assets. This presents a potential growth opportunity for the REIT since it’s also looking into third-party assets. 

According to a recent CREDAI-CRE Matrix report, office demand will exceed 70 million square feet by 2024, due to the government’s emphasis on manufacturing expansion and investing in digital and physical infrastructure. Each of these is expected to boost office absorption and create new opportunities for REITs. 

Fractional ownership is driving a paradigm shift in real estate investment

Fractional Ownership is an investment model aimed at retail investors who can gain access to the high-value commercial segment. 

With the real estate sector expanding across key markets, driven by demand sales, investors are increasingly looking for ways to capitalize on the bullish run. The real estate sector has matured due to regulatory changes, which has sparked investor interest. What truly democratized the industry was the introduction of investment concepts such as Fractional ownership, which allows individual or retail investors to invest in high-value properties while earning fixed returns on rent-generating assets. 

While alternative investment options such as AIFs and REITs are gaining popularity in India as profitable and effective investment vehicles, they are primarily geared toward institutional and high-net-worth investors. On the other hand, investment models such as Fractional Ownership are aimed at retail investors, who can access the high-value commercial segment through this model. The good news is that this model provides new avenues for retail investors yet allows developers to consider various funding options.  

According to a report by a leading real estate consultant, the market for fractional ownership in India was USD 5.4 billion in 2020 and is expected to reach USD 8.9 billion by 2025, growing at a 10.5%  CAGR. This is an unambiguous sign of fractional ownership’s rapid growth as a viable investment opportunity. 

Fractional Ownership became more popular among investors after SEBI proposed various Fractional Ownership Platforms (FOPs) to register with SEBI MSM REITs and made it mandatory to follow some specific registration procedures. According to the proposal published by a leading real estate firm, MSM REITs should include separate and distinct entities serving as trustees, sponsors, and investment managers. SEBI also proposes that MSM REIT be established as a Trust under the Indian Trusts Act, with the ability to create separate schemes for owning real estate assets. This would be accomplished through SPVs (Special Purpose Vehicles) established as companies under the Companies Act of 2013. MSM REIT Scheme shall have complete control and 100% equity share capital in all SPVs. 

These regulatory changes benefited investors because they can now leverage benefits such as fair pricing, transparent transactions, and the flexibility and opportunity to exit or liquidate their investment at any point. 

With the digitization and technological advancement of the real estate industry, investors can also benefit from easy tracking via web-based FOPs, making it easier for them to make data-driven decisions. It also provides visibility previously unavailable when proper real estate investment space was not in place. 

Diversification is another important factor that has redirected investors to fractional ownership, particularly since the pandemic, when the stock and commodity markets have become volatile. The uncertainties caused by global economic headwinds necessitated the exploration of more promising avenues and markets. In contrast, India’s real estate market has continued to show promise, with the commercial segment breaking records for leasing and demand. According to a report, the Indian Commercial Real Estate Market is expected to grow at a CAGR of 21.1% between now and 2028, from USD 33.62 billion to USD 87.57 billion. 

As India’s ease of doing business index ranking improves in the coming years, more global corporations will establish their headquarters here. Global occupiers in sectors IT, manufacturing, BFSI, startups, and the booming service industry will require high-quality workspaces for their employees. These will result in more Global Occupier Centers (GCCs) operating from India’s key cities, thus increasing and accelerating demand for Grade-A office assets. In this scenario, fractional ownership will benefit both developers and investors. As the sector grows, fractional ownership will continue to open up new opportunities for investors in the coming years. 

Real estate employment skyrockets

According to recent findings, Sashi Kumar, Head of Sales at Indeed India, stated, “The construction industry provides enormous opportunities for skilled professionals and semi-skilled labor. 

According to Indeed’s recent survey, hiring in the construction and real estate sectors increased by 86% between March 2023 and 2024. This surge in demand has conceded with a 57% increase in job seeker’s interest, with Delhi, Bangalore, and Mumbai leading the way.  

According to Indeed data, the top three cities for construction hiring are Delhi (5.05%), Bangalore (4.68%), and Mumbai (4.13%). A strong business environment, a rise in warehousing and industrial needs, increased commercial housing requirements as migration rises, the opening of manufacturing facilities, and other factors could all contribute to this trend. 

However, smaller cities like Ernakulum (2%), Kochi (1.50%), Lucknow (1.38%), and Calicut (1.25%) are among the top regions attracting job seekers. This trend could be attributed to low living costs or local job opportunities that allow people to work closer to home. Ernakulum, Calicut, and Kochi are the top Tier 2 and 3 cities for job postings.  

Engineers (17.18%), project leads and supervisors (8%), and architects (5%) are the most popular job roles, accounting for the majority of job postings. Engineers (21.31%), project leads and supervisors (9.33%), and architects (4.27%) are also popular among job seekers, which is consistent with the demand. As construction becomes more complex and technical, the industry requires more skilled workers. 

The construction industry remains a key driver of economic growth, offering numerous opportunities for skilled professionals and semi-skilled workers. The significant increase in hiring signals promising opportunities for job seekers and employers, while the increase in job seeker interest reflects the industry’s strong momentum. 

Who is investing in Indian real estate, and where? Check this report.

According to a Cushman & Wakefield report, the Indian real estate sector received USD 1.1 billion in investments in Q1 2024, with the residential real estate sector outperforming other asset classes and attracting investments of nearly $693 million. 

In recent quarters, the residential sector has been on an upward trend, driven by strong housing demand and resurgent supply. It has also attracted a great deal of capital from investors in Q1 2024, who are banking on the segment’s bull run, which accounted for more than 63% of total realty investments in the quarter. 

In absolute terms, the Q1 2024 investment inflow into the residential market is twice the quarterly average over the previous eight quarters. 

Furthermore, nearly 48% of investment in the residential sector was concentrated in the early stages of development across the top eight cities, indicating increased investor interest, a steady rise in residential capital values across cities, and a growing share of high-end luxury launches.  

Who is investing the most? 

According to the report, domestic investors maintained a strong investment momentum, accounting for 57% of total quarterly investments. Foreign investors and collaborative (or mixed) deals accounted for 43% of the inflows in Q1 2024. This is consistent with the trend observed in 2023 when domestic investors participated in Indian real estate. 

In terms of city-specific split, Bangalore led the way, accounting for 25.6% of total investments in Q1 2024, with more than half of the share going to the city’s office sector. Pune ranked second in terms of investment volume, accounting for 14%. 

Investment in equity

Equity investments in the real estate sector stood at 58% in Q1 2024, while debt investments increased to double the quarterly average level of the previous eight quarters, with almost all of that going to the residential sector. 

The office sector remained the preferred sector among equity investors, accounting for 43%, closely followed by residential investments (38%). Despite a slowdown from the previous quarter, early-stage deals remained consistent with the average in-flows over the last eight quarters. 

In addition, corporate transaction volumes increased by 65% year on year, reaching INR 12.78 billion (USD 0.15 million). Mumbai continued to drive transaction value, accounting for 57% of the total, followed by Pune at 33%. 

According to Somy Thomas, MD of valuation & advisory and capital markets at Cushman & Wakefield, “Q1 2024 saw another strong quarter of capital inflow into the Indian real estate sector, with residential dominating due to renewed customer and investor confidence. This strong performance has piqued investors’ interest, prompting them to invest in a market that is expected to grow even more. 

“Domestic investors increased their investment in the quarter, providing additional protection against potential global headwinds while strengthening India’s domestic market and investor interests. As we start the new fiscal year, we expect this momentum to continue, with potentially more diverse investments in the future. 

This expert believes that the power of real estate is at the heart of India’s transformation

According to Ankur Gupta of Brookfield Asset Management, local businesses are upgrading office spaces. Indians are looking for higher-quality homes, hotels, restaurants, and vacations, reflecting significant lifestyle changes over the last few decades. 

According to Ankur Gupta, Managing Partner and Head of APAC and ME Real Estate at Brookfield Asset Management, the sector contributes significantly to the economy directly and indirectly and thus is at the heart of India’s recent transformation. 

“Real estate provides that house, that backbone, not only by directly contributing to GDP but also by increasing productivity. A good quality real estate establishment, whether a manufacturing hub, logistics infrastructure, offices, high-quality homes, or hospitality, is the foundation for various industries. Gupta cited steel, cement, paints, and tourism as examples of direct users or secondary contributors to hotels. 

He cited the fact that local businesses are increasingly looking to transform their office spaces, and Indians want to live in higher-quality homes, visit higher-quality hotels and restaurants, and take vacations that were less desirable several decades ago.

Brookfield, he says, is very interested in these shifts in demand, and the next major motivator would be to support the growth of the country’s manufacturing system and the development of logistics and industrial hubs. 

These transformations will necessitate massive amounts of capital, a collaborative approach with the government and various state bodies, and the cooperation of organizations such as Brookfield. 

India’s unique combination of services and manufacturing will propel it to global leadership. It makes no difference if it is second or third. He believes that it is currently the best market in the world to invest in. 

A study predicts that residential real estate prices in India will increase by 4-6% this year

According to a report released on Tuesday, home prices in India are expected to rise by 4-6% this year, with rising per capita income driving demand. 

CRISIL Ratings believes that moderate inflation, stable commodity prices, lower fiscal deficit, and a drop in global policy rates will pave the way for interest rate cuts to boost housing demand. 

“Range-bound growth in capital values and a likely moderation in interest rates in the second half of this fiscal year will ensure affordability improves after a decline in the previous two fiscal years due to a sharp increase in interest rates and capital values,” it said. 

In terms of sales, the market share of India’s 11 listed real estate developers is expected to double to 30-32 percent this year, up from 15% in the pre-pandemic fiscal year 2018-19. 

DLF Limited, Brigade Enterprise, Godrej Properties, Kolte-Patil Developers, Microtech Developers, Mahindra Lifespace Developers, Prestige Estates Projects, Puravankara, Sobha, Shriram Properties, and Sunteck Realty have a track record of delivering on time and with quality. 

According to CRISIL Ratings, “continuing premiumization,” affordability, and rising per capita income should help large, listed residential developers achieve a 10-12 percent increase in sales volume this year, up from an estimated 14% growth last year. 

“Large developers have already strengthened their credit profiles by deleveraging balance sheets through strong sales and collections over the last two years and focusing more on asset-light models, such as joint ventures and joint development,” said Pallavi Singh, associate director at CRISIL Ratings. 

Real state supply has shifted towards mid-to-high-end and luxury homes, while launches in the affordable segment are expected to remain muted. According to the report, the share of launches in the mid-to-premium and luxury segments is expected to be 55-60% in 2023-24, up from 30-35% before the pandemic. 

India’s ultra-rich are shifting their investment focus to residential real estate

The ultra-rich in India devote a sizable portion of their wealth to residential properties, which account for 32% of their investment portfolio. 

For some time now, India’s affluent class has been shifting its investment focus to residential real estate, indicating a significant shift in the country’s investment landscape. This transition highlights changing investment preferences and reflects the motivations behind the elite’s decision to invest in residential properties. 

According to a recent Knight Frank report, India’s ultra-rich are allocating a significant portion of their wealth to residential assets, with 32% of their investment portfolio devoted to this sector. A growing number of ultra-high-net-worth individuals (UHNWIs) plan to buy a new home by 2024, indicating an increasing appetite for residential real estate investments in India. 

Parvinder Singh, CEO of Trident Realty, commented, “This growing interest of elites in the residential real estate sector reflects a shift towards quality living spaces that cater to evolving  lifestyle preferences.” 

Elites are drawn to high-quality residential projects that provide sustainable and multifunctional living spaces, which satisfy their desire for exclusivity and modern amenities. The residential sector is expected to grow significantly by 2024, driven by urbanization, rising incomes, and a desire to live in harmony with nature. To appeal to affluent buyers, we designed our projects to offer privacy, space, and connection to nature. Our developments provide a distinct blend of luxury, sustainability, and comfort to meet the discerning tastes of elite homebuyers.” 

Knight Frank’s flagship report, The Wealth Report 2024, predicts a significant increase in the Indian UHNWIs, rising to 19,908 by  2028 from 13,263 in 2023. This equates to a massive 50.1% increase, the fastest growth rate in the number of UHNWIs in any country over the next five years. 

Aman Trehan, Executive Director of Trehan Iris, says, “The surge in residential property investment among India’s elite class represents a remarkable shift in preferences, fueled by a thriving economy and evolving lifestyle choices. According to Knight Frank India’s 2024 Wealth Report, 32% of UHNWIs are considering investing in real estate, with 12% planning to buy new homes in 2024. This report highlights the sector’s unprecedented growth and reveals Delhi’s rise in the real estate sector. With a combination of high demand, favorable mortgage rates, and a strong economy, the allure of luxury properties and alternative assets is likely to persist among high-net-worth individuals and ultra-high-net-worth individuals. This year, 22% of wealthy individuals intend to invest in residential properties and 19% in commercial properties. 

Furthermore, the ongoing expansion of infrastructure and connectivity initiatives, particularly in the National Capital Region, is expected to open up new opportunities for elite investors, promising capital appreciation and improved lifestyles. As we look ahead, the trajectory of India’s real estate market is poised for further evolution, implying a promising outlook for the market in the coming years,” he adds. 

Furthermore, people exhibit a positive economic sentiment, reflecting the Indian economy’s resilience and potential. This shift in sentiment coincides with a broader recognition of real estate’s enduring value and potential for long-term financial growth. Investors are positioning themselves to accumulate wealth and create multigenerational wealth through real estate investment. 

Aman Sharma, Founder & Managing Director of Azrize Group, says, “Seeing India’s super-rich devote 32% of their wealth to housing properties is extremely encouraging. There is a strong belief that real estate is a significant driver of wealth preservation and growth. This data demonstrates our dedication to delivering high-quality projects that appeal to the discerning tastes of affluent buyers. We recognize the importance of providing luxurious yet secure options consistent with this demographic’s investment preferences. Such insights guide our strategic planning, ensuring that we continue to meet the market’s changing demands while maintaining our position as a reliable provider of premium real estate.” 

Aside from economic factors, lifestyle changes are spurring demand for luxury and larger homes among India’s upper classes. The ultra-luxury housing sector’s unprecedented growth in 2023 reflects affluent individuals’ strong desire for premium living experiences. This emphasis on enhancing lifestyle offerings is a major reason the wealthy prefer to invest in residential properties, as they seek to improve their living conditions and indulge in luxurious living experiences. 

“The surge in luxury housing sales among India’s elite is up 130% Y-O-Y, signaling a seismic shift in the industry,” says Ashish Sharma, AVP operations at Brahma Group. According to Knight Frank’s Wealth Report 2024, they allocate 32% of their wealth to residential properties.

A strategic pivot towards tangible assets both luxury and long-term capital appreciation. 

The desire for luxurious urban living, combined with an increasing number of high-net-worth individuals, has prompted wealthy investors to design spaces that embody luxury, comfort, and exclusivity. The decision to invest in luxury real estate has evolved into an important statement of status and intent. Furthermore, in the coming years, the industry can expect to see a rise in participation from India’s elite as it continues to grow. 

According to Ashish Sharma, AVP operations at Brahma Group, “the surge in luxury housing sales among  India’s elite, up 130% year on year, signals a seismic shift in the real estate landscape.” According to Knight Frank’s Wealth Report 2024, they now invest 32% of their wealth in residential properties, up from 20%. This strategic shift toward tangible assets offers both luxury and long-term capital appreciation. Driven by the allure of upscale urban living and a growing population of high-net-worth individuals, affluent investors tend to invest in environments that exude comfort, exclusivity, and status. Luxury real estate has evolved beyond mere acquisition into a profound statement of status and purpose. Furthermore, the sector is expected to experience a surge from India’s elite, with an upward growth curve in the coming years.” 

This trend opens up exciting opportunities for the Indian real estate market. Luxury developers can meet the growing demand for exclusivity, comfort, and long-term value among ultra-high-net-worth individuals seeking prime residential investments. However, stay ahead of the curve by anticipating changing preferences and offering innovative solutions to the elite’s ever-changing needs. 

NAREDCO Praises REITs for Changing the Game in Indian Real Estate Investing Accessibility

The National Real Estate Development Council (NAREDCO) and Kedia Corporate Advisors Pvt. Ltd. co-presented a February webinar on Small and Medium Real Estate Investment Trusts (SM REITs). Since the Securities and Exchange Board of India (SEBI) has recently made significant regulatory changes, it is important to grasp the details of SM REITs in light of the importance of the webinar. During the session, CA Amit Kumar Kedia, Director of Kedia Corporate Advisors Pvt. Ltd., explored the advantages and regulatory framework of SM REITs and shared his insights. 

“We discussed in the webinar how important it is for regulatory frameworks to support entrepreneurship and innovation in the real estate industry. By putting a premium on compliance and openness, we strengthen investor confidence and enable SM REITs to reach their full potential as reliable investment options. By introducing SM REITs, the stringent disclosure and compliance requirements aim to align the REIT market with the Indian equity market, fortifying the regulatory framework and projecting India as an appealing destination for local and foreign investors, augmenting our stature as a worldwide investment hub. 

The goal of the launch of SM REITs, based on the “schematization movement” in financial products, is to democratize ownership by making ownership accessible and affordable for a broad spectrum of investors. The objective of India to become a developed nation by 2047 is supported by initiatives such as these. Let us embrace this historic policy change as we all work together to embrace this major policy change as we all work together to build an empowered and developed India,” he stressed. 

Many subjects were covered in the webinar, such as the idea of SM REITs, the regulatory environment, market analysis chances to draw in investors, risk management techniques, potential tax ramifications, and future outlooks. To answer questions from the participants, a lively Q&A session was held. 

“The SM REIT webinar was a game-changer for the real estate industry in India. Delving deeply into creative methods and tackling challenges, served as an impetus to progress. Through this webinar, we aimed to empower the workforce, foster sustained growth, and drive development within the sector, focusing on alternative financing through Real Estate Investment Trusts (REITs), “stated G Hari Babu, National President of NAREDCO. 

“As the world’s fastest-growing major economy, India is expected to see faster real estate market growth in 2024, with all real estate indicators at record highs. An encouraging step to facilitating real estate investment in India is the introduction of small and medium-sized REITs. By attracting more retail and institutional investors and lowering entry barriers, these Real Estate Investment Trusts (REITs) hope to boost market confidence by offering opportunities for diversification. This new regulatory framework is expected to boost investments, liquidity, and the influx of both foreign and domestic capital into the real estate industry, according to NAREDCO Chairman Dr. Niranjan Hiranandani.

“The real estate industry has been going through significant transformations, with increased organization and the entry of new corporate players,” stated NAREDCO Vice Chairman Rajan Bandelkar. The industry benefits from this evolution in several ways, including increased stakeholder faith and trust, which were lacking previously. Moreover, there is now a stronger relationship between the real estate market and the share market, with rises in the former typically having a favorable effect on the latter.  

The March 8, 2024 approval of SM REITs is one noteworthy development. Real estate investment trusts (REITs) offer a fresh approach to real estate investing, facilitating quicker access to funds benefiting individual investors. Even those with smaller savings can invest in real estate thanks to REITs, as they allow for fractional ownership and market participation. The advantages are exclusively available to larger investors and are now available to regular people thanks to the democratization of investment opportunities.” 

Indian Real Estate Market: Charting the Country’s Course for, Economic Growth

Over the years, the Indian real estate market has been crucial to the growth of the nation’s economy. The industry includes a wide variety of activities, such as the development of infrastructure, retail and industrial spaces, and residential and commercial real estate. The sector is one of the main forces behind India’s economic growth because of its significant impact on GDP. One of the most recent reports from CREDAI, the body that apexes the builder, shows this contribution. 

According to a new report from the Confederation of Real Estate Developers’ Association (CREDAI), the market size of the real estate sector is predicted to reach $ 1.3 trillion (or 13.8% of GDP) by FY 2034 and $5.17 trillion (or 17.5% of GDP) by FY 2047. The report also forecasts an increase in housing demand of Rs 7 crore by 2030. 

“With the increasing demand for real estate, the sector holds the potential to be the primary economic pillar of this country,” stated Manoj Gaur, President of CREDAI-NCR and CMD of Gaurs Group. Delhi-NCR, one of the nation’s largest real estate hubs and the site of a 3% increase in housing sales, emerged as a major contributor to this development. The growth of the economy as a whole as well as  other macroeconomic indicators, such as employment, government and banking system revenues, and  rising per capita income, have all been strongly impacted by the Indian real estate market.” 

The current value of the real estate market is 24 lakh crore, which emphasizes the split of 80% for residential properties and 20% for commercial properties. The residential segment has aspirational growth for Indian homebuyers amidst housing demands. 

“The residential real estate is the key driver of the construction sector in India,” said  Ankush Kaul, Chief Business Officer of Ambience Group, emphasizing the sector’s contribution. The residential real estate market influences the nation’s economy and stimulates the creation of local infrastructure such as schools, roads, and utilities. Millennium City in Gurgaon is among the best illustrations of how improved infrastructure boosts the local economy by enhancing lifestyles. We envision that the rising housing demands will benefit homebuyers and investors, thus impacting the country’s overall economic growth.” 

“Commercial real estate includes large-scale infrastructure development, including office buildings, malls, hotels, industrial parks, etc., which brings forth jobs in construction, architecture, property management, and many other fields,” stated Sanchit Bhutani Managing Director of Group 108. Cities with high-quality commercial real estate draw domestic and foreign companies, which promotes business growth and increases productivity. Among the many cities, Noida stands out as it is developing into a bustling center offering plenty of commercial spaces. Businesses in the area contribute to the GDP and revenue generation of the nation as they expand and thrive. 

In addition, the CREDAI report states that 61% of the existing supply in the residential segment is priced higher than Rs. 45 lakh. Over 87.4% of housing demand will likely be satisfied by homes priced over Rs 45 lakh by 2030. 

“India’s GDP is growing thanks largely to the residential and commercial real estate sectors, which stimulate economic activity, generate jobs, facilitate wealth creation, and support the country’s financial markets and infrastructure. The estimates provided by CREDAI provide insight into the industry’s role in the nation’s advancement toward becoming Viksit Bharat, according to Trisol RED MD Pawan Sharma. 

“India’s urbanization rate has sustainability increased and is expected to increase to 40% by 2030,” stated Nayan Raheja of Raheja Developers. We anticipate that as urbanization increases, demand  for housing, business and retail space, and better infrastructure will soar.” 

India’s high-end residential and commercial real estate market will draw domestic and foreign investors. Productivity will rise, and company growth will be encouraged as a result. The economy of the nation will grow  as businesses flourish and grow, according to Vidush Arya, Head of Strategy at Orris Group. 

“The residential real estate sector significantly boosts India’s economic growth and catalyzes the infrastructural development in the nearby areas,” stated Amit Modi, Director of County Group. Cities like Noida are becoming more and more popular among investors and homebuyers as a result of the growth in upscale residential properties with contemporary amenities. This improves the residents’ quality of life even more and boosts the local economy.  We anticipate that in the long run, this increased demand for housing will affect the nation’s economic growth. 

Is it possible to sell real estate without co-owner approval?

Property owners in India have the legal right to sell their possessions. However, before selling jointly owned properties, the law requires the approval of each co-owner. Thus, what happens if the asset goes under without the joint owner’s approval? What is the national legal system regarding the selling of properties held jointly? What are my legal options if the property is already for sale?  

Mr. Satendra Pal Singh and his brother share ownership of a property. He needs the money, so he wants to sell this property. But soon after, selling jointly owned property puts Mr. Singh in a difficult situation. Does his co-owner have to approve it before he can sell it? By answering the question, “Can a property be sold without the consent of the other co-owners?” this article seeks to address the concerns of many joint property owners, including  Mr. Singh. 

Is it possible for someone to sell a joint property? 

If the following two requirements meet the criteria, then an individual can sell a jointly-owned property in India: 

  • Co-owners may sell their respective portions of jointly owned property without the other’s permission if their respective shares of equity in the individual shares are left out. However, selling jointly-owned property requires approval from the co-owner.  
  • Every co-owner must consent to the sale conditions and the distribution of the proceeds. 

Is it possible to sell a family property without the approval of other members? 

Hindu Family Law states that it’s unlawful to market family property without the approval of additional family members. All family members must agree to sell it because everyone works together to acquire it. However, it is crucial to remember that a family-owned property is not always an ancestral one. For at least four generations, great-grandfathers have been the custodians of an ancestral property. 

What separates co-ownership from joint ownership of a property 

The death of a co-owner is the only circumstance that distinguishes co-ownership from joint ownership of property. When a co-owner passes away, their portion of the property passes to the remaining co-owner or owners. 

What can be done legally for a property without the co-owner’s approval? 

If a seller transfers their jointly owned property without the consent of the co-owners, the co-owners may take the following legal actions: 

Bring a civil lawsuit: The resentful co-owner may bring a civil lawsuit to challenge the property sale. The court ordered the other party to stop disposing of the property. 

File a criminal case: The other co-owner may do the same if the other co-owner sells the jointly-owned property for a false sum. 

It varies from case to case regarding the possibility of selling a shared property with or without the co-owner’s approval. Property owners must thus ensure fair and legal property transactions and be aware of their rights and responsibilities. 

The top six cities in India saw a 20% increase in housing sales in Q1 2024

Despite obstacles brought on by rising prices, the Indian real estate market saw a bright start in 2024 with a spike in demand for residential properties. 

The top six Indian cities— Delhi NCR, Mumbai, Bengaluru, Hyderabad, Chennai, and Pune— saw a 20% increase in housing sales from January to March. NoBroker says the total number of housing units sold has surpassed 1,47,000. 

As a result of continuous advancements and investments in the real estate sector, the market will continue to grow, demonstrating its resilience and potential. 

The Indian real estate market did not take off in 2024. Propelled by a surge in demand for residential properties despite challenges posed by rising prices. With several new project launches underway and many more in the works, this momentum will continue in the upcoming months. 

In addition, homebuyers should benefit from the RBI’s recent decision to keep the repo rate at its current level. 

“The average rent increase has been higher than average salary increments across cities that have prompted potential home buyers to take the plunge,” stated Amit Agarwal, CEO and co-founder of NoBroker.com, in response. 

Even though rents might stabilize as more supply gradually enters the market, they will not decrease.” 

This year has gotten off to a fantastic start with increased demand and a compound increase in real estate transactions. The nation’s economy is growing, and this, along with a controlled environment for economic policy, has given buyers more confidence to take the risk. “We anticipate strong sales despite the ongoing increases in real estate prices, which is a sign of the positive sentiment surrounding home buying and the determination of buyers to acquire a physical asset. The comparatively lower interest rates on house loans, which currently range from 8.30% to 11.5% annually, further support this outlook,” he continued. 

Among homebuyers, a new trend that suggests a “K-type” growth trajectory is worth nothing. People who had their eye on properties between Rs 80m lakh and Rs 1 crore are now upgrading their preferences above that amount. Within gated communities, they are selecting larger unit sizes and properties. There has been a downward shift in the housing choices of those initially considering homes between Rs 60 lakh and Rs 80 lakh as they choose more affordable options. This divergence in consumer behavior highlights how different market dynamics affect various population segments, which in turn contributes to the growth patterns’ bifurcation. 

We have even seen some projects get taken up within a day of their launch against an environment of rising demand, which shows how quickly things move in the market. 

In addition, there has been a noticeable increase in the price of completed properties, making buyers more desperate to secure their purchases before prices continue to rise. A noticeable trend adding to this dynamic landscape is that Grade B builders are starting to command prices comparable to those of their Grade A competitors, pointing to a leveling of the playing field regarding pricing dynamics, according to Agarwal. 

There will probably be ongoing pressure on property prices due to the high demand for residential real estate and the hike in input costs, leading to more upward revisions. Also, by increasing affordability, facilitating better loan terms, and creating a more favorable market climate for real estate transactions, India’s reduction in retail inflation may benefit real estate purchasers. 

According to NoBroker’s annual real estate report 2023, investors continue to view real estate as a top investment option. 74% of respondents preferred it over other, riskier options like SIPs, stocks, gold, and bitcoin, which indicates how much people liked it. Bengaluru and Delhi-NCR make up half of the major cities’ combined sales. Compared to 2023, Bengaluru anticipates growing by more than 25% annually. 

India Needs a Highly Matured Real Estate Sector by 2047, Says Housing Minister

India wants to become a developed country by 2047, and the housing minister has emphasized how vital it is to establish a highly developed and mature real estate sector. To realize this vision, the real estate industry must work together to improve sustainability, efficiency, and transparency. 

The minister’s comments emphasize how vital the real estate industry is as a pillar of urban and economic development. Encouraging economic growth, ensuring social inclusion for all societal segments, and building livable cities depends on a healthy and well-regulated real estate market. 

The professionals in the real estate sector will be essential in promoting innovation, investment, and legislative change as India plots its path to becoming a developed country. The minister’s demand for a highly developed real estate market highlights the necessity of all-encompassing reforms and teamwork to overcome obstacles and realize the market’s full potential. 

The Housing Minister’s emphasis on the importance of a highly developed real estate sector demonstrates the government’s commitment to promoting sustainable urbanization and economic advancement. India hopes to build thriving, inclusive cities that will act as catalysts for future growth and prosperity by giving the real estate industry top priority.  

How will this massive real estate settlement affect the buying and selling of homes?

Real estate agents’ compensation will now be genuinely negotiable instead of essentially being a standard commission, thanks to a settlement reached last week between the influential National Association of Realtors and a lawsuit. 

Why it matters: In a world where business models are still mainly based on tradition, the deal may allow real competition in a tightly controlled market. 

  • It might reduce broker fees in real estate, much like the internet did for stock trading. 

The result: Since sellers filed the lawsuit as a class action, that should result in lower expenses. The effect on purchasers is more intricate. 

Currently, sellers pay a commission of between 5% and 6% of the sale price of their house. 

  • A commission split is customary between the buyer’s and seller’s agents. 
  • It indicates a conflict of interest because the buyer’s agent represents the seller. 

(Agents, of course, dispute this statement, claiming that upholding their reputations depends on serving buyers well.)

By NAR guidelines, sellers must disclose the buyer agent commission on the Multiple Listing Service, the online platform where real estate brokers list properties for sale. 

  • A particular box exists just for this number. 
  • Buyers’ agents see the number; the buyers do not. 

Putting an agent’s interest in a higher fee ahead of the buyer’s interest in finding a suitable house creates a risk of agents steering clients toward higher-fee deals. 

If the court approves this settlement, that box disappears. Sellers were no longer able to guarantee buyers’ agents a commission. 

  • A box may seem like a little bureaucratic detail, but the ramifications could be enormous. 

Crucial query: How will buyer agents be compensated? A few possibilities: 

  • The buyer’s one-time payment. 
  • The buyer agrees to pay the broker an hourly rate or a portion of the sale price. Perhaps they choose not to use a broker at all. 
  • The real estate sector highlights the chance that a seller could still pay the buyer agent’s commission. However, that would need to come up as a concession later in the deal-making process. Seller may provide a cash credit to cover maintenance or other costs during a transaction. 
  • Monitor the funds: Here, future home sellers stand to gain significantly. When they sell a house, they ought to get a portion of the sale price.
  • TD Cowen mentions online and discount brokerages that offer lower commission rates as another potential winner.
  • Real estate attorney Marty Green, based in Dallas, predicts that there will likely be a cottage industry of raw Realtors.
  • Yes, yet: Things are unclear for first-time purchasers and those on a limited budget.
  • They may have to pay for the real estate agent out of pocket, stealing money from their down payment and other expenses. They will no longer receive a real estate agent for free. And no one is certain if they can roll an agent’s fee into a mortgage. It might necessitate modifying regulations. 
  • Did buyers ever receive a free agent, though? 

In summary, a significant number of agents anticipate a decline in commissions. According to Steve Brobeck, a senior officer of the Consumer Federation of America, it might be as low as 1% -1.5% per agent on each side. 

What comes next: Although the significant changes will not happen, the settlement may take effect as early as July. “A truly competitive marketplace will take a long time to emerge,” states Brobeck, who has spent decades advocating for similar reforms.” “The industry will resist this.”  

Realtors Association approves seismic settlement, eliminating the 6% commission on home purchases or sales

The customary 6% commission in house purchases is no longer in place. 

The National Association of Realtors announced a settlement with groups of home sellers on Friday, agreeing to end historic antitrust lawsuits by paying $418 million in damages and doing away with commission regulations. 

It’s an important decision that will drastically reduce the price of buying and selling a house.  

A new set of regulations will also take effect, as agreed upon by the NAR, encompassing over a million Realtors. One ban includes agents’ fees in listings on regional multiple listing sites or centralized listing portals. It has come under fire for encouraging brokers to pressure clients into purchasing more expensive properties. Brokers must also be subscribers to multiple listing services. Another new rule will require buyers’ brokers to put their clients into written contracts. 

The deal will end the present home-buying and selling business model, which critics claim has artificially raised house prices because sellers pay their and the buyer’s brokers. 

TD Cowen Insights reports that real estate commissions could drop by up to 25 to 50%. Alternative real estate sales models, such as flat-fee and discount brokerages, that currently exist but have a small market share will have more opportunities. 

With investors fearing that lower agent commission rates would result in less business for real estate platforms, shares of real estate firms Compas and Zillow both fell by more than 13% on Friday. 

Zillow issued a warning last month in a 10-K filing, saying that “it could negatively affect our financial condition and results of operations if agent commissions have a significant impact, which could reduce the marketing budgets of real estate partners or reduce the number of real estate partners participating in the industry.” Shares of brokerage firm Redfin dropped by almost 5%. 

As a result of the news, homebuilders’ stocks increased: Toll Brothers’ shares increased 1.8%, Lennar’s shares increased 2.4%, and PulteGroup’s shares increased 1.1%.  

Brokerage fees for sellers of the $417,000 average price American home are more than $25,000. The buyer bears the additional costs, which drive up the cost of homes in the United States. That charge might decrease by as much as $12,000. It is according to TD Cowen Insights’.

“The benefits the settlement will bring to our industry outweigh the significant cost associated with it,” stated Kevin Sears, President of the NAR.

Among real estate companies that donated more than Rs 1000 crore through electoral bonds, DLF and Chennai Green Woods Private Ltd. were at the top

Last week, the EC made available SBI’s electoral bonds data. Of the real estate companies that donated more than Rs 1000 crore, DLF and Chennai Green Woods Private Ltd. were at the top. 

Data released by the Election Commission, which also released SBI’s list of entities that purchased electoral bonds for political donations, shows that between 2019 and 2024, over 40 real estate firms gave more than Rs 1000 crore to political parties through these bonds. 

On March 14, the Election Commission made accessible SBI’s electoral bond data in two files: one file contained the names of the bond buyers, and the other contained the names of the political parties that cashed the bonds. 

Several well-known real estate firms, including DLF’s subsidiaries DLF Commercial Developers Ltd, DLF Luxury Homes Ltd, and DLF Garden City Indore Pvt Ltd, contributed Rs 180 core to the electoral bonds. These are in the corresponding years’ books of accounts. There are no more remarks from us,” the company representative stated. 

Chennai Green Woods Private Ltd., a construction company that contributed Rs 70 core, is owned by the Ramky Group. According to the EC’s data, B.G. Shirke Construction Technology Pvt. Ltd., which has “millions of sq. ft of construction encompassing mass housing projects,” contributed more than Rs 80 crore. 

K Raheja Corp made a roughly Rs 20 crore contribution. The business remained silent. 

Real estate companies must obtain over 20 regulatory approvals from local and state bodies before starting construction, which include environmental clearances, zoning regulations, construction permits, and building permits. 

Property transactions were the most common use of cash in 2022, according to a LocalCircles study, based on the value of each transaction. Even though things had gotten better over time, buyers acknowledged that they paid cash for properties they had bought in the preceding seven years, according to the report. 

Benami transactions were once prevalent. In these kinds of transactions, one party transfers or holds property, but a third party pays the consideration to conceal the actual owner’s identity. On November 1, 2016, the Benani Transaction (Prohibition) Amendment Act became operative. The Supreme Court had disapproved of its use retroactively in 2022. 

The Real Estate (Regulations and Development) Act, 2016 (RERA) aims to protect homebuyers’ interests and promote investment in the real estate sector. Real estate projects and agents must register to ensure adherence to project timelines, quality, and fair practices. With the introduction of RERA, homebuyers now have more confidence. 

Other property firms purchasing election bonds 

The Prestige Group has made contributions totaling nearly Rs 45 crore through its businesses, which include Prestige Garden Estates Private Ltd, Prestige Projects  Pvt Ltd, Prestige Habitat Ventures, Prestige Notting Hill Investments, Prestige South City Holdings, Prestige Estates Projects Ltd, and Prestige Management and Services. The company did not respond at all.

The Rustomjee Group made a nearly Rs 5 crore contribution. The business remained silent. The list shows that BKC Properties Pvt. Ltd. and Omkar Realtors Projects Pvt. Ltd. each contributed Rs five crore. 

Lulu contributed Rs 2 crore, while Inorbit Malls  India Pvt. Ltd. contributed approximately Rs 20 crore among retail companies. 

The list included other developers such as Fortune Estate Developers Pvt Ltd, Sohini Developers, SRI Developers, Ashoka Developers, Magarpatta Township Development & Construction Company, Suman Estates Pvt Ltd, Chennai Greenwoods Pvt Ltd, Fortune Estate Developers Pvt Ltd, and Sweta Estates Pvt Ltd. 

MAHARERA Cancels 13,785 Real Estate Agents’ Registrations

The Maharashtra Real Estate Regulatory Authority (MAHARERA) took a significant step and revoked the registrations of 13,785 real estate agents. This ruling demonstrates the authority’s dedication to upholding integrity in the real estate industry and enforcing regulatory compliance. 

The reason for the cancellation of registrations is that the individuals did not follow the regulations and did not behave professionally and ethically. To protect the interests of stakeholders and homebuyers, MAHARERA has taken strict action to enforce accountability and transparency in real estate transactions. 

A wide range of real estate agents in Maharashtra have had their registrations revoked, underscoring the authority’s proactive stance in resolving non-compliance issues within the sector. Enforcement actions by MAHARERA function as a disincentive to unscrupulous practices and emphasize the significance of conformity to regulatory standards.

Deactivating registrations creates a ripple effect in the real estate market, making things more transparent and accountable for buyers and sellers. It highlights how vital regulatory supervision is to maintaining moral behavior and just business practices in the sector. 

Stakeholders expect increased trust and confidence in the real estate market as long as MAHARERA maintains regulatory standards and monitors compliance. By acting decisively, the authority sets a clear precedent that failure to comply is unacceptable, encouraging a culture of professionalism and integrity within the industry.

MahaRERA reports that the success rate of agreements between developers and homebuyers is approximately 50%

The RERA Act mandates that MahaRERA provide a forum for consumer or promoter associations to establish dispute resolution to promote the peaceful resolution of conflicts between developers and homebuyers. 

The success rate of MahaRERA’s conciliations in settling disputes between real estate developers and homebuyers was 35 to 50 percent. Data given to MahaRERA indicates that approximately half of them proceed with hearings following the failure of conciliation. 

According to MahaRERA’s data, since the conciliation forum’s establishment in 2018, the organization has handled over 1,200 cases. 

“The conciliation process is going well, with a 35-50% sensation. As things are closed, it is much faster, and there are no more appeals. We do handle cases that go back to us. Ajoy Mehta, Chairman of MahaRERA, told Moneycontrol 50% of the cases, which is a respectable rate. 

Of the 1,231 conciliation cases handled, 1,061 have been settled, and 170 are still pending. However, according to MahaRERA, the success rate of conciliation is between 35% and 50%. 

Conciliation forum

As per the Real Estate (Regulation and Development) Act, 2016, Section 32 (g), MahaRERA must allow developers and homebuyers to settle their disputes amicably using dispute resolution forums established by the promoter or consumer associations. 

The forum consists of promoters’ association representatives from Mumbai Grahak Panchayat. This forum handles disputes between developers and homebuyers resulting from the RERA Act. 

It occurs following the buyer’s registration with the conciliation forum. The MahaRERA conciliation forum holds hearings after the developers approve the request to resolve conflicts. 

Homebuyers can file a complaint with MahaRERA if the developers refuse to participate in conciliation. If a developer or homebuyer fails to comply with the terms of the agreement reached at the conciliation forum, the aggrieved party may choose to complain with MahaRERA. 

Grievances

The MahaRERA has received 24,379 complaints from homebuyers against developers, or vice versa; orders have been in more than 16,474 cases from Maharashtra.

Ways to raise the rate of success?  

Members of the conciliation forum assert that party-centricity is the cornerstone of any mediation or conciliation process, and the success rate will only rise when all parties involved approach the process with a settlement mindset. 

“A conciliator functions as a mediator, and for there to be a settlement, all parties must cooperate. According to Hitesh Thakkar, a partner at Prem Group and conciliator of the MahaRERA conciliator forum on behalf of NAREDCO, the apex body of developers, “the hearings at the forum do not happen on merits, and all concerned parties have to come with that mindset considering the success of conciliation is also depending on that.”  

Five things to be aware of in the Bengaluru real estate market if you intend to rent an apartment there

Thirty percent rent increases in specific parts of Bengaluru have caused the city’s rental inflation to exceed that of Singapore. 

Over the last few months, rent in Bengaluru has risen by over 20% to 30% due to several companies abandoning work-from-home policies, which has caused the “floating” employee population to return to their offices from their hometowns. As a result, there are right now far too many renters vying for a limited number of properties. Additionally, there have been cases where over four potential tenants have competed for the same property. Due to this, the IT city’s rental inflation has reached nearly 24%, making it competitive with other major cities like Singapore. 

Tenants in a city bereft of rental properties have been finding it difficult to comply with landlords’ constantly shifting demands; some have even gone so far as to look up potential tenants’ LinkedIn profiles. Additionally, there have been cases where real estate agents have given tenants have even jokingly said that it is harder to pass a “rental” interview than it is to pass a job interview. 

India’s average rental inflation rate now exceeds that of Singapore and Dubai. In Singapore, the average annual rental inflation has been approximately 29%, while in Dubai, it has been 20%. According to a NoBroker study, certain areas of large cities, like Bengaluru, are seeing exponential rent increases of 30% and higher. 

According to a report by Anarock Group, residential rent in India’s IT hub has increased by as much as 31%. “Rents will rekindle in the January to March 2024 rental market as Indians typically relocate in search of better job opportunities and amid increased hiring in the new fiscal year,” the report stated. 

The opening of Bengaluru offices has significantly increased demand for real estate near IT parks and office clusters. Additionally, there is a rise in demand for homes along these connectors as the new metro corridor comes online.

Properties near metro stations in the IT city have seen a 15-18% increase in rent due to increased demand. 

“Over the past year, Bengaluru has seen a sharp increase in housing rentals. According to Akhil Gupta, co-founder and chief executive and technology officer of NoBroker, “the average rent inflation to the IT capital has been 24%, with rent inflation reaching 30% in certain parts of the city.

A further trend is an increase in demand for rentals in areas that are accessible by metro but are not always close to office buildings.  

The mandate requiring employees to return to their workplaces has resulted in a notable departure of individuals, thereby augmenting the need for residential real estate. The need to purchase a home and the pandemic’s effects on supply and demand have raised demand for residential properties. Rents and prices have increased as a result, according to Gupta. 

He also mentioned how Mumbai’s metro connectivity has led to rental prices that are significantly higher than those of most other cities. It would be unfair to compare Bengaluru to Mumbai or Delhi because of how better connected these cities’ metro areas are.  

Metro connectivity is highly beneficial, as the IT city is known for having a lot of traffic. According to our annual report, Bangalore has experienced the highest rate of rent inflation thus far this year. 

According to him, there has been a 7-10% increase in rental inflation in the areas close to the metro line. 

One notable connection is the Metro corridor, which runs from the western city of Kengeri to the eastern IT corridor of Whitefield. 

According to Kiran Kumar, vice president of Hanu Reddy  Realty in Bengaluru, rentals in East and North Bengaluru have increased dramatically since the Metro opened for business. Desirable areas like Whitefield, Koramangala, and Indiranagar along the purple line have seen a 20% increase in rental prices.

Previously renting for Rs 30,000 per month, a 2BHK next to the Indiranagar Metro corridor now fetches Rs 45,000. Rent for a 5BHK independent bungalow is Rs 3 lakh per month. Last year, the rent was approximately Rs 1.9 lakh per month. Compared to approximately 70,000 per month last year, a 3BHK in a gated community in the same area now commands rents between Rs 80,000 and Rs 1 lakh per month. A 1-BHK apartment without a parking lot for Rs 10,000 a month is now renting for Rs 22,000.

Rental prices have increased in areas along the metro corridor because of better metro connectivity between the east and the north. Because there are fewer properties than there is demand for them, people are willing to pay higher rent for properties near the Metro, according to him. 

In Whitefield (located close to the IT corridor) as well, a 3BHK is going for Rs 50,000 to Rs 70,000 per month, and a 3 BHK villa that was going for around Rs 80,000 before the metro became operational today commands a rent of around Rs 1.5 to almost 2 lakh, he told HT Digital.  

Are rent negotiations tough for tenants? 

Looking at the rental market, it is still more in demand than it is in supply. The goal of tenants in gated communities is to obtain lovely residences. Therefore, even at high rentals, there are still a lot of takers in gated communities. There is hardly any time for negotiations because deals are closing so quickly. Consequently, Gupta said, “There is always another tenant waiting, willing to pay higher, even though tenants may want to negotiate.”

Has the cycle of rental deal closure gotten longer or shorter? 

The inventory shortage has resulted in a significantly shorter transaction timeline. Deals have closed in as little as one day on occasion. Tenants are inspecting the property before the weekend even arrives, Gupta says.

New draft notification

Prospective tenants should be aware that the city’s governing body for civic and infrastructure, Bruhat Bengaluru Mahanagara Palik (BBMP), is getting ready to introduce a value-based property tax on April 1. Property owners may pay twice as much in taxes on rental properties under the new system as on owner-occupied properties. It could put more pressure on tenants’ high rents because of the mismatch between supply and demand. 

Can a crisis similar to China’s Evergrande occur in the Indian real estate market?

Evergrande: One significant distinction between the real estate markets in China and India is that the former has steady buyer demand. 

A Hong Kong court ordered on January 29th the liquidation of the troubled Chinese real estate giant Evergrande. This decision will likely impact the nation’s financial system and the trust of foreign investors. This article looks at the tremendous strides the Indian real estate market has made since the collapse of Infrastructure Leasing & Financial Services, which caused a crisis of non-banking financial companies (NBFCs). 

Experts in real estate claim that there are parallels and differences between the Infrastructure Leasing & Financial Services (IL&FS) debacle and the Evergrande crisis. Both have significant adverse impacts on their respective markets, including high debt levels and inadequate financial management. However, in contrast to China, India’s real estate market recovered gradually due to national initiatives and the creation of the Real Estate Regulatory Authority.

“Thanks to government initiatives and regulatory changes like RERA, India’s real estate market has gradually recovered following the IL&FS disaster. India’s real estate market is more stable than China’s, falling despite challenges like capital shortages and regulatory barriers. The IL&FS crisis was mainly limited to India; Ever grande’s problem has global implications due to its size and exposure to foreign debt, according to ANAROCK Capital’s MD and CEO, Shobit Agarwal. 

Global implications of the Evergrande issue are more extensive. 

China’s real estate market is slowing down, but India’s is more secure despite ongoing challenges like capital shortages and regulatory barriers. According to Agarwal, the IL&FS crisis mainly applied to India, but the scope and exposure to foreign debt of Evergrande’s problem have global implications. 

It is noteworthy that Evergrande owes over $300 billion in debt. Thousands of homebuyers stood in a bind over building and financial mismanagement regarding unfinished apartments. According to agency reports, High Court judge Linda Chan’s ruling on January 29 essentially starts a drawn-out process that includes selling off the developer’s assets and changing the management to ease the worries of its creditors. 

According to agency reports, Ever Grande’s demise came in 2021 when Beijing tightened its lending policies to real estate developers to curb the bubble. 

What distinguishes the two real estate markets? 

Nearly 40% of all home sales in China are due to Chinese real estate developers, who have struggled with severe debt default since 2021. Of the $175 billion in outstanding dollar bonds, they have defaulted on over $114.6 billion. The ongoing COVID-19 impact and government regulations governing financing methods are among the factors. Gulam Zia, Senior Executive Director at Knight Frank India, explains that these actions have developers’ funding options while preserving financial stability and controlling property price surges. 

With 3,100 real estate projects, almost four times as many as Evergrande, and $ 191.7 billion in total liabilities, another real estate developer, Country Garden, has been struggling financially. As per a report published in the South China Morning Post last week, troubled Chinese developer Country Garden Holdings has listed some assets for sale in Guangzhou to clear a significant amount of debt due within the next six months. 

Zia continued, saying another factor to consider is that Chinese homebuyers need more confidence due to unfinished projects and lax laws allowing developers to withdraw funds from escrow accounts.

Furthermore, the real estate industry in China makes up roughly 30% of the country’s GDP, compared to only 7% in India. Real estate experts predict it will not increase by more than 15% even over the next 20 years. 

At $477 billion in valuation, the real estate industry in India accounts for 7.3% of the country’s GDP. According to projections, the economy will grow significantly, reaching $5.8 trillion by 2047, or 15.5% of total output. This growth is due to the increasing demand for better living spaces brought about by rapid urbanization, according to a Knight Frank and Naredco report from the previous year.

RERA: Revolutionizing the real estate industry in India 

The industry has been made cleaner by the real estate regulatory bodies that have been established around the nation to control the real estate market and safeguard homebuyers. 

China faces many challenges, but urbanization will continue to grow India’s market. Thanks to changes in regulations and lessons from past failures, the Indian market has become more resilient and customer-focused. Compared to its Chinese counterparts, India’s real estate market has a brighter future, which puts it in a more stable position, says Zia. 

Persistent demand for housing 

The consistent end-user demand is the primary distinction between China and India. 

Even in times of economic recession, such as the Lehman crisis in 2008, the demand for real estate in India has remained steady. In India, the main issue was developers abusing the money that buyers purchased homes with. China, on the other hand, faced challenges with many builders finding it difficult to make timely payments, which were made worse by limited access to funds due to the global economic situation, as Zia points out in his research paper titled India’s Resilient Real Estate Market Amidst China’s Real Estate Woes: A Comparative Analysis.

Forbes Global Properties enters the Indian real estate market with plans to build in Goa, Delhi, and Mumbai.

In Navi Mumbai, Forbes Global Properties intends to construct a 100-acre project. It is negotiating for a housing project in Goa and a commercial project in Delhi. 

On January 24, US-based Forbes Global Properties revealed its entry into the Indian real estate market by providing brokerage services for upscale residences. In collaboration with landowners, it also intends to build two projects totaling 10 million square feet in Delhi and Mumbai. It also investigates the possibility of building a 10-lakh-square-foot residential project in Goa.

The amount of money the company planned to invest in India was kept a secret. 

Forbes Global Properties, a company founded in December 2020, not long after COVID-19, entered the Indian market using a membership network model. It is already present in 26 countries, where 17,000 agents serve clients with real estate needs.  

The international company will receive a membership fee from the Indian venture “Indian Forbes Global Properties.” The Indian venture’s chairman will be A.K Sharma. According to Sharma, the business would use a development management model to carry out projects. “Brokerage is our primary business,” Sharma stated. “India Forbes Global Properties will offer brokerage services for the luxury residential market and is considering purchasing equity stakes in at least two of these consulting firms.” 

India has a sizable market and economy. To better assist our clients looking to purchase and sell luxury properties, we have expanded into India. Forbes Global Properties CEO Michael W. Jalbert will reporters in this location. 

India Forbes Global Properties will first develop a 100-acre mixed-use project in Navi Mumbai in partnership with Orange Smart City, building a 1,200-acre integrated township. Infrastructure construction is the responsibility of the Mumbai Metropolitan Region Development Authority (MMRDA). 

PropEquity Analytics and India Forbes Global Properties FGP have partnered as well. 

“In 2019, there were about 5235 units in India’s luxury real estate market (above $1 million), with a total value of $5 billion. It is now a more than 100% increase in that number.  Approximately 13,600 units are worth $12 billion today. The demand from the NRI segment and the general expansion of the Indian economy are the main reasons for this number’s growth, according to PropEquity’s founder and CEO, Samir Jasuja. PropEquity is a cutting-edge online search platform for real-time data, intelligence, and analytics. 

The network of invitation-only Forbes Global Properties members represents many of the best properties available worldwide for purchase and is exclusive to the most illustrious brokerages in particular cities and second-home destinations. High net-worth individuals, inventors, and real estate investors will have access to some of the most sought-after and unique properties through Indian ventures.  

YashoBhoomi: India’s revolutionary breakthrough in the conference, tourism, and real estate sectors

The largest convention center in India, Yashobhoomi, was inaugurated by Prime Minister Narendra Modi in a historic ceremony in Dwarka, Delhi. This bold initiative, which aims to capitalize on the estimated Rs 25 lakh crore industry, is poised to redefine India’s standing in the global conference tourism sector. I explore the nuances of Uashobhoomi’s influence on the Dwarka Expressway real estate market as a real estate sector. 

The Vision of Prime Minister Modi

Yashobhoomi’s unveiling coincides with Prime Minister Modi’s strategic plan to increase India’s currently low 1% global conference tourism market. India’s dedication to hosting international conferences, meetings, and exhibitions can be seen in Yashobhoomi and Bharat Mandapam, representing a daring step toward global prominence. 

Recognizing Conference Travel: 

The UN World Tourism Organization defines conference travel as gatherings of ten or more people for at least four hours set up in a contracted location more than fifty miles from home. There has been a recent trend in this segment, which frequently goes by the name MICE tourism (meetings, incentives, conferences, and exhibitions), to refer to its broad scope as the “meetings industry.”

Yashobhoomi: An Innovating Space:

Yashobhoomi, with its enormous project area of over 8.9 lakh square meters and its built-up area of over 1.8 lakh square meters, is expected to rank among the best MICE facilities in the world. Modern amenities at the facilities set India apart as a global center for conferences, events, and exhibits, drastically boosting the travel and business industries in the nation.

To All International Stakeholders:

Prime Minister Modi invited all interested parties to utilize Yashobhoomi’s resources during the unveiling. The amalgamation of contemporary facilities and Indian culture at Bharat Mandapam and Yashobhoomi is a potent emblem of India’s story worldwide.

Bharat Mandapam’s Success and Future Prospects:

Prime Minister Modi expressed confidence that Yashobhoomi would exceed expectations, building on the success of Bharat Mandapam, which recently hosted the G20 leaders’ summit. The facility has the potential to showcase “India of the future” to the world community, he said, underscoring the country’s commitment to hospitality, grandeur, and excellence.

Real Estate Boom:

The introduction of Yashobhoomi has led to an increase in demand for nearby residential and commercial real estate. There is a need for commercial development since Yashobhoomi-related businesses are actively looking for adjacent office spaces. Furthermore, the scale of the Dwarka Expressway and commercial sectors will likely increase significantly, drawing Fortune 500 businesses to operate close to the International Airport.

Conclusion:

With the opening of Yashobhoomi, India advances to the top of the 25 million-dollar conference tourism industry. The growing demand for office and residential spaces is expected to benefit the real estate sector, especially along the Dwarka Expressway. The Dwarka Expressway’s opening before the next Lok Sabha elections will enhance these encouraging advancements even more. Keep checking for more information on how Yashobhoomi influences India’s development and prosperity with conference tourism.  

Registration Fees for Land

If you plan to buy land in India, you must consider the cost of registering your property besides the price of the property itself. Depending on the state and type of purchase, property registration fees and stamp duty charges can amount to 7% to 10% of the total property cost. 

Registration fees in most Indian cities and towns are 1% of the property value. Aside from these fees, you will pay a cess and a small surcharge. 

Different Cities’ Land Registration Fees/Charges 

Name of the City Registration Fees
Bangalore 5%
Delhi 4% if the owner is a woman
6% if the owner is a man. 
Mumbai 1% or Rs. 30,000 
Chennai1%
Kolkata1% if the value of the property exceeds Rs. 40 lakhs. 

What is Land Registration? 

When you register a property in your name, the state government will charge you a registration fee, which is a percentage of the total or filed value of the property. The Registration Act of 1908 imposes a fee for registering your property documents in your name. This fee applies to both new and existing property registrations. 

Property registration fees vary by state. It also depends on who will register the property. Women and senior citizens receive a registration fee reduction from the state government. 

Factors Influencing Property Registration and Land Charges 

  • Property, new or used:  The property registration fees vary by the type of property you want to register. A high registration fee is usually required to enter a new property. It makes sense because the registration fee is a percentage of the total cost of the property. A new piece of land typically has a higher total property cost than an old piece of land. It usually has a higher total property cost than a piece of older land. When you register a not-so-new or old property, the registration fees will be low because the home’s value has decreased since it occurred. 
  • Commercial and Residential Property: The fees for registering a commercial property are higher than those for registering a residential property. It is primarily because commercial real estate, unlike residential properties, requires additional amenities such as swimming pools, escalators, and exclusive parking. 
  • Geographical Factors: The property’s location has an essential impact on the registration fees. If your property is in a city or a developed town, you must pay a high registration fee. You should also consider the state where you’re buying the property because state governments charge property registration fees. 
  • Transfer Type: If you are buying a property from someone other than a family member, you must pay the standard registration fee. However, if you transfer the property’s title to a family member as a “Gift Deed,” the registration fees are low. 
  • Amenities: As previously stated, if you have amenities such as a clubhouse, community hall, library, outdoor play area, swimming pool, cargo lift, or gym, you must pay a high registration fee. The amenities-valuation method requires you to pay more for each additional amenity in your building. 
  • Airport, bus, or train station proximity: Did you know that if you live near an airport, bus station, or railway station, you will face a high registration fee? Yes, that’s correct!
  • Property ownership gender: The government waives registration fees for women’s properties. So, if you have a female member, you can register the property in her name to save money on registration fees. 

Documents Required 

Property registration requires the submission of the following documents: 

  • Certificate of encumbrance valid until today. 
  • The electricity bill 
  • Registered Development Agreement (if it relates to Joint Development property) 
  • Power of attorney, if any 
  • A copy of all previously recorded contracts (if real estate is under offer)
  • ‘RTC’ stands for Records of Rights and Tenancy Corps. 
  • The landowner’s title records and a sale deed in the seller’s name 
  • Tax returns from the previous three months, as well as the most recent bank statements, if money remains due from a loan. 

How are land registration fees calculated? 

Property registration fees depend on the current market value of your home. If you have both the market value and the agreed-upon value of the property, the greater one will be the charge. 

  • Aside from the cost or value of the property, the type of property, location of the property, gender and age of the owner, usage of the property, and a number of floors all influence the property registration fee. 
  • Stamp duty officials usually use the Stamp Duty Ready Reckoner to determine the property’s worth. The Stamp Duty Reckoner is published annually on January 1st by the relevant state government.

Calculator for Property/ Flat Registration Fees 

Use an online property registration fee calculator to determine how much you must pay out of pocket before registering your property. Many online calculators can calculate the registration fee in a matter of seconds. All you have to do is: 

  • Enter basic information about the property, such as its location and cost, and then click the “Calculate” button. The charges will appear on the monitor in no time. You do not have to go to the local register office to find out. Thanks to technology!

TDS on Rent of Residential Property

Renting out a property in India has several tax implications that the tenant and landlord should be aware of. TDS or Tax Deducted at Source, is one such provision. The government implemented it as a tax collection mechanism to streamline the process and prevent rental income tax evasion. 

Understanding the nature of TDS on house rent in India from various perspectives is thus necessary if you are involved in rental properties. In this blog, we will look at TDS and its requirements from the standpoint of residential property. 

What exactly is TDS?

TDS is the tax deducted from the source of income. For example, if A has to pay B a specified amount, A must deduct tax at the origin, i.e., TDS, and transfer it to the Central Government’s account. The amount deducted will then be credited to B by the provisions of the Income Tax Act. 

Rent Taxes in India 

Property in India pays taxes under various sections of the Income Tax (IT) Act 1961. As a result, whether you sell or lease your property, you will benefit from a tax break. Deductions occur at the source in taxes like the tax on property sales in India or income tax on house rent. 

Section 194-I of the IT Act addresses the provisions for rental income. Tenants should deduct TDS and remit it to the central government account, which the lessor/landlord is entitled to receive as a credit if the TDS certificate or Form 26QC is in order. 

However, the tax treatment depends on several factors, including the nature of the property, its use, rental income, and an individual’s tax status. 

The nature of the properties has fallen into the following categories under the same provisions: 

Residential Properties

House Properties used for rental purposes are, naturally, subject to income tax on house rent in India. You can deduct expenses like municipal taxes and mortgage interest to calculate taxable rental income. 

Tax Deducted at Source on the Rent 

Though TDS is an essential term in the IT Act, a few people understand how taxes accumulate at the source. The Indian government enacted this provision to ensure that rental income is accurately collected. Here are a few things that both residents and NRIs should be aware of.