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Affordable housing scheme will drive real estate sector in 2018, predict RNA Corp

February 6, 2018

After achieving success in the affordable housing scheme in 2017, the real estate sector is expected to continue its drive in 2018, predict experts at RNA Corp, a Mumbai-based realty company. The requirement in this segment, along with the government’s schemes, which propels to grant the quo-status of housing facility to everyone, is helping the affordable housing scheme grow manifolds.

The established realty developers around the country are also expected to expand their scope of business categories. With changes in the demand pattern, the focus has primarily shifted towards compact, efficient, affordable homes for high and mid-class level of buyers.Additionally, with the coming up of new regulatory reforms and taxation policies and goods and service tax (GST), property development is in a stable position in 2018. Experts at RNA Builders believe that 2017 was a precursor, which brought the much-required stability in the ranks of real estate, rolling a great scheme to support the idea of affordable housing.

The sector is likely to continue and fulfill the needs of end-user after reasonably priced condos saw a rise in 2017. Interestingly, around 75,000 new residential units were built across eight top cities of India, where 31% was contributed by real estate in Mumbai, informs Anubhav Agarwal, RNA Corp MD.

Besides, with interest rates dipping at almost a decade low, and the Pradhan Mantri Awas Yojna (PMAY) already implemented, the governments’ clarity on the definition of affordable housing is crisp and clear. Furthermore, the swiftness of project cash generation, i.e., inflow and outflow of funds is much higher as compared to conventional real estate units. Which implies that a great number of units getting sold, before the actual completion of project.

Clearly, even as the developers grappled with the two major forces, i.e., RERA and GST, the impact on business is a positive, where the governments’ scheme is estimated to realize over 20% internal rate of return (IRR) consistently across market cycles. Also, Prime Minister Narendra Modi’s plan to provide houses for all by 2022 will boost the economy by $1.3 trillion, creating over 60 million new houses and over 2 million jobs every year.

 

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