The RERA was introduced in 2016 but became fully functional in 2017. All 92 provisions came into effect in May 2017. This was followed by the introduction of GST in July 2017. And with RERA and GST, India’s two long-awaited needs were fulfilled:
- The first was the need of a Regulatory board similar to the Securities Exchange Board of India for the capital markets. And The Real Estate (Regulation and Development) Act, 2016 (RERA) does exactly that. It brings real estate buyers and developers on the same ground by injecting transparency and accountability in the property sector which for years was controlled by builders and developers.
- The second was the need for an IT network backed taxation system. GST serves the exact purpose.
However, an independent and recent BrandX report by the real estate thinks tank Track2Realty brings out some key insights about the NRI perception of India’s real estate market. A few important points that remain a deterrent factor for NRIs across the globe include:
- Lack of proper redressal mechanism for grievances.
- GST Ambiguities.
- Poor Return on Investment (ROI)
Other key highlights from the online as well as offline survey whose sample space included NRI participants from US, UK, Middle East, South Africa, Canada, Australia, New Zealand, Malaysia, Singapore, and Mauritius include:
No Future Investment Plans: The survey reveals that 62% have no plans to invest in the property market. Almost 84 percent agree that the incentives on investment are minuscule.
Lack of Transparency: 50% of the respondents feel that it would take around 36 more months for the market to become lucrative as well as transparent. 26% say that transparency could take more than 5 years to settle in. Only 16% are hopeful that the property landscape would change in a year’s time.
Negligence of Consumer Interests: 56% NRIs say that there is no guarantee for the protection of consumer interests against false doings by non-registered developers. 68% advocated the need for a properly functioning redressal mechanism for grievances.
Improper Valuation and Low ROI: While 40 percent NRIs say that the properties are overvalued or too costly, 38 percent doubt the appreciation potential. Furthermore, 22 percent complained about low rental returns.
GST Complexities: Touted as the most complex form of indirect tax since inception, the GST remains a tough nut to crack for NRIs too. The report says that 70 percent of NRIs find it extremely confusing to calculate GST and stamp duty. The complex GST acts as a repellent says the report.
Diminishing Emotional Connect: The new generation NRI’s lack the first-hand bond that their elder siblings shared with India. Young NRIs (as many as 78 percents) lack the emotional urge to invest in India.
The Weak Rupee also remains a major reason for the cautious NRI to refrain from real estate investments, However, 68 percent NRIs are of the view that if some incentives like opening up agricultural land are on offer, they may consider the prospect.
Read Also: Impact of Goods and Services Tax on Real Estate Sector in India
The Track2Realty no doubt is an eye opener of some sort but we must also not forget that these are early days for RERA and GST. Stamping them as ineffective would be unfair and also unreasonable. An evaluation of the impact of the two reforms would be too early at this point. GST is still in its teething stage. Ground realities if not contrastingly different yet promises better days ahead. A positive thing would be to bridge the gaps in governance as well as fill the loopholes that plague fast-track resolution of grievances.
