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BY: Neeraj Bansal, Partner and Head, Real Estate, KPMG

The year 2017 is perhaps among the unforgettable years for the Indian real estate sector. The sector incumbents adjusted with the slew of landmark reforms and structural changes including implementation of RERA, and GST; demonetization of high value currency notes; Benami Property Transaction Act, thrust on affordable housing sector.

Consolidation and transformation spree to continue

These landmark reforms have strengthened the consolidation and transparency drive in the sector. While the large and organized developers and real estate agent complied with the new reality – by undertaking organizational transformation – several local and casual operators were witnessed existing the sector.

Affordable housing – the next big thing

The affordability gap in Indian housing demand supply seems to be filling up – thanks to recent efforts such as PPP policy on affordable housing by Government of India; infrastructure status to the industry; correction in property prices in last few years; and reduction in interest rates.

It is yet to be seen if the initiative will drive benefits as major issues such as land and approvals needs to be resolved. However, we expect the affordable theme to continue through 2018.

In 2018, launches are expected to be primarily be in the affordable space and select supply may come in premium and luxury segments.

Some green shoots visible in property market

The disruption created by the tri-reforms of demonetization, RERA and GST seems to be settling in and consumer sentiments are lifting. The sales in last couple of months appears encouraging and the sector is set to enter 2018 on a positive note. In near term, the property sales could rebound faster than expected as the Indian demographics changes – urbanization, smaller families and rising income – may eventually drive up the property buyer sentiments.

However, we don’t expect any significant new launches as there is significant stock of unsold inventory and developers have refrained from launching new projects. We expect developers to continue focusing on completing existing projects and offloading unsold inventory.

The property prices, which witnessed correction in early 2017 – especially in investor led markets appears to have settled. However, we don’t expect any significant appreciation in 2018 owing to high level of unsold inventory.

Institutional funding remains strong

Institutional funding in the sector has been at all-time high in 2017, thanks to mega commercial and warehousing deals. The sector witnessed significant interest from global pension funds attracted towards the high rental yielding assets. Residential refinancing – prevalent theme since last couple of years – witnessed a slowdown as the outlook remained weak.

Next year, we expect funding for residential real estate to improve on the back of improving macros. With RERA and GST behind us, we expect funding from banking channels to improve.


• The real estate sector has witnessed a series of landmark reforms and structural changes in the affordable       housing sector. The sector is expected to further consolidate.

• The consumer sentiments seems to be finally lifting off, but it would be too early to term it as recovery in the    sector. We don’t expect any significant new launches and absorption levels will continue to improve in near    term.

• Funding in the real estate sector especially from banks is expected to improve on the back of reforms such    as  RERA.

• Affordable housing will be the segment to watch out for in 2018. With a significant housing need and recent    reform push – we hope that this segment will finally take off on an institutional scale.

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