Are expectations of real estate investors met in Bangalore?

As the year 2017 passed by midway, the country has witnessed many changes mostly due to several amendments and defined policies by Indian Government to construct a strong foundation and build up a robust economy. When it comes to the real estate sector, the developers and investors are pinning high hopes on these reforms and some have even been significantly fulfilled to their benefit. The reforms are implemented on the real estate industry to promote more transparency, earn the confidence of buyers and the builders and to grow capital inflows from different institutional investors. Some of the policies like RERA, amendments in REITs among others have fulfilled the expectations of real estate investors: 

·         REITs: The Real Estate Investment Trusts (REITs) or Infrastructure Investment Trusts (InvIT) implemented by the Government is determined to bring about a positive breakthrough in the realty sector of Bangalore. The REITs will be a good guide for the individual investors, whereby they can acquire a share from the income generated through a well defined commercial real estate ownership. The REIT as a lucrative investment vehicle have many key benefits like enhanced transparency, steady growth of dividends, a efficient administration and a good source of accessible capital. The real estate investors in Bangalore, especially the ones ridden with debt would now get a radical way to grow capital through the REIT. For a realty company to qualify itself as a REIT and efficiently build the properties in Kormangala, it would require maximum assets and generated revenue associated to various real estate investments. It is also mandatory for the company to distribute a minimum 90% of their REIT sales proceedings to the shareholders as efficient dividends.

·         RERA: The Real Estate (Regulation and Development) Act, proposed by reputed Parliament of India is to property buyers and to promote an increase in the investments for the real estate industry and real estate in Kormangala. As per this act, it is mandatory for the residential and commercial realty projects having land above 500 square meters or possessing more than a total of 8 apartments, to register efficiently with RERA. This will then create good transparency in the way the project is built and marketed in the industry. For the ongoing realty projects which haven’t acquired any completion certificate till RERA is commenced, they need to register within the period of 3 months.

·         Benami Transaction Prohibition Act: This Act aims at eradicating black money and illegal money laundering practices in different sectors in the country. In terms of real estate this Act strictly regulates the sale and purchase of Benami properties and transactions. It would stop the illegal practice of the people investing their acquired black money in purchasing different Benami Properties in a way to evade taxation process. In the realty sector itself, this Act would have long-term good effects, as all transactions would then be done in the real owner’s name. This will enhance transparency in the residential real estate market and generate lower risks, which will ultimately improve residential properties transactions.

Although the actual impact of the reforms introduced by the Government can be evaluated closely only after they are executed for a long term period, the positive effects of them however are seen influencing different sectors and boosting further development of the economy. For the real estate sector, these reforms are aim at improving the governance of the industry, to eradicate any prevailing fraudulence, rationalize the taxation structure and also to boost development in the industry. As such, the expectations of the real estate investors have significantly been met and their hopes are on the way to fulfilment in future.