The favourite asset segments for domestic and foreign investors have always been office real estate and residential, and the market of residential property has got a slight edge over the commercial segment in the first quarter of 2017.

During the first quarter, several residential projects pulled an investment worth more than Rs.26000 crore. On the other hand, commercial projects pulled an investment of almost half the amount, that is, Rs.13600 crore.

Out of the total investment of, land pulled 2.5% of it at Rs.1065 crore and retail only managed to pull 2% at Rs.870 crore because of the scarcity of supply in quality malls. These figures of investment are derived from the blend of equity and debt.

In the years from 2010 to 2016, private equity and institutional investors have favoured the residential asset class over the office asset class. However, equity flows have seen a downfall in the residential sector in the past few years, and this has paved the way for debt and structured instruments.

The downfall that the office class asset has witnessed is the reason that investors have become a little careful and have turned to construction debt and packaging receivables so that their investments are safe against the bond of the asset. However, commercial market saw the strengthening of equity flows, showing that big investors are interested in equity positions.

The constant increase of equity share financing clearly shows that investors want to be project partners and also their positive outlook for commercial assets.

According to Tata Steel, the emphasis on the growth of infrastructure will aid in attaining cost efficiencies that are world class apart from also aiding the growth and demand of steel. The National Steel Policy has been given the green signal by the Cabinet. This new policy will support to reorganize the promoters to make way for India so that it realizes its capability by developing the kind of infrastructure that the young population of India is aspiring for.

The steel industry of India has the potential and is striving to grow to 160 kg per capita from the present degree of 60 kg per capita consumption in the next 13-14 years, as predicted by the National Steel Policy 2017 which is declared by the Ministry of Steel.

The MD of Tata Steel says that they are really looking up to the execution of the new policy and the foreseen growth of the sectors that deal in steel while they will support the

Government to look after the other issues. Other issues include availability of raw material and clearing the restrictions put on logistics.

As per the announcement by the National Consumer Disputes Redressal Commission (NCDRC), consumer organizations, RWAs (Residents’ Welfare Associations) and cooperative societies of homebuyers have to be registered to be able to file allegations or complaints against the developers.

The phrase “voluntary consumer association” had some vagueness attached to it which has been cleared by stating that this term means the association or society being registered under the Companies Act of 1956.

The commission cleared the air by also saying that any Trust is not allowed to file a complaint in the name of a group or any consumer.

The main motive of the commission is to analyze, communicate, protect and encourage the consumers’ interests.

The body or association coming forward and filing a complaint should be formed by a group of people who are doing this in their own interest and are not influenced by any financial motives.

NCDRC will also have to qualify and be eligible for being a voluntary consumer association. If it has financial motives behind the formation and is not serving the benefits of the consumers, then it will not be considered as voluntary consumer association.

Any organization which is formed for the benefit of common people should be credible enough and this clarity will speed up the entire process of cases. The buyers will be asked to get their associations registered if they want the court to hear their case.

The misconception among people that real estate is one of the best investment opportunities is mostly because of the lack of knowledge about the same. You may hear stories of the increasing value of a house or plot manifold in 50 years. This seems very fascinating and alluring, but when it’s actually not. When mathematically calculated, an increase which is even 100 folds in 50 years results in just 9.6% of increase per year, which is not anything special. However, these gains could have only taken place as per the old system of real investment.

Presently, they can’t take place. If we consider the price of a particular property, there a total of five ways of gains and ultimately the profit made is a product of all these. These five stages of sources in order are –

1.The genuine change in utilization of the land, that is, from agricultural to commercial or residential.
2.The actual development or construction of the infrastructure of land to make it suitable for use.
3.The development in habitat or commercially workable as more people start living in the area.
4.The major changes, that is, the highs and lows, which actually affect the scenarios of real estate market.
5.The usual inflation of the country’s economy that plays a major role in the changing the prices of the properties.

In the past, many years back, when people bought properties, they used to do it on an early stage. Therefore, the gains accumulated from all the sources to them in 20 to 30 years. But now, because of the changing trend, people buy flats from the developers of real estate sector and all the gains till stage three get accumulated with him. And the worst part remains that the developer even wants to get the gains of stage 4 and 5 from the buyer in advance. People get convinced and the developer succeeds in capturing all the stages of gains. The marketing done for the real estate developments has reached a new level and they make you believe that if you don’t invest in and pay for the project today, it will be a big loss to you as in the future, this project will be the most sought-after in the community.

If we talk in the investment jargon, the price of acquiring is at high value that will be achieved in a later future. As a result, it doesn’t matter that the rates of flats in South Delhi may have increased 50 times in 50 years, the flats located in the new developing areas which may cost Rs.5 crore will not yield you Rs.250 crore in 50 years. This is because the developer has already included the increased future value into the present price.

The model of real investment has been modified drastically, and from the buyer’s perspective, it has no modified for the good. And therefore, preferably, people should invest in only one home which he has to live himself.

Various fund houses have their plans to make their investments in the segment of Infrastructure Investment Trusts (InvIT) and Real Estate Investment Trusts (REIT). Now, funds have the liberty to invest as much as 5% of the total asset value in different securities. In case there is just one fund, then the investment amount is 10%. The key modification in the system of investment is an elementary change in the scheme features and this is the most probable reason why various fund houses are seeking investors to either give consent to their agreement or quit the investment.

What are REITs?
REITs are those companies which are the owners of and rent out residential or commercial segments of real estate. The income generated via rent-out process is shared among the investors of REIT according to the units that have been allotted to them. These units are negotiable while exchanging.

What are InvITs?
InvITs are just like REIT, however, the only difference being that they are the owners of just infrastructure and not the real estate.

Looking at the current scenario where the returns are becoming quite less, being acquainted with these investment instruments can improve the return profile of a fund.These instruments are new and untried and thus, can lead to the issue regarding liquidity.

If the investors wish to quit the scheme they can easily do so within the scope given by the fund house and without paying any quitting charge. Moreover, they have the liberty to shift to another scheme within the same fund house.

Finally, homebuyers have some good news regarding the delay in possession, which has been the biggest issue in the real estate sector. This is because of the new provision by Real Estate Regulatory Act (RERA).

Vini Mahajan, the interim regulatory authority in RERA, has said that ongoing-projects can advertise themselves even without getting registered. They can keep going with the various activities. On the other hand, the projects which will not submit the application to the regulatory authority for registration will not be able to advertise their projects.

The existing homebuyers will get relief and relaxation under RERA as the authority will work on strict rules. The contract which will take place between the developers and homebuyers can only be highlighted with following the RERA rules.

The homebuyers who will face delay on possession in housing projects will be liable to receive interest on the total amount invested by them. The interest will be calculated keeping the total period of delay and the rate of interest decided by RERA.

Also, the ongoing projects will only be allowed to get registered under RERA only if the developer agrees to the condition of paying interest to the buyer at the decided rate by the authority. This rate is 2 percentage points more than SBI’s MCLR (Marginal Cost of Lending Rate) and not the rate which had been decided at the time of sales agreement.

A survey which was conducted has shown that post demonetization, there is very less confirmation of any crucial price correction in the real estate market. This is just the opposite of what the previous reports said.

If we have a look at the general overview of the market situation, it remains unsatisfactory as an effect of the demonetization.

The survey focuses on the quarter which came right after the move of demonetization, which conveys that even after the note-ban; the expected price depreciation did not take place for the scarcity in the volumes of transactions.

The properties which were ready were preferred over the under-construction properties. But the prices of these properties have witnessed a downfall. And on the other hand, the under-construction property prices have witnessed an increase, according to the survey.

As per the report, the range of prices which are preferred by the consumers in the residential segment is Rs.3000-6000 per square feet. Since the prices in the residential segment are expected to remain the same, the present market situation will be continued for the next 6 months. In 14 cities across the nation, more than half of the localities come under this price range.

One more point that the survey reveals is that the main suburban cities which lie in the middle and high budget levels have performed well if we talk about the price in the quarter.

The real estate market of Delhi and National Capital Region (NCR) saw a fall in the prices in the quarter by 1%. Among all the cities of NCR, Delhi witnessed the highest downfall in prices in all the segments.

The real estate market of Delhi is going through a major slump, which seems to be the most affected in the country. Gurgaon is also not far behind, with the problems of piling up of unsold flats, sluggish prices and delay in projects.