The universe of Indian real estate sector has witnessed a paradigm shift after the coming of policies like RERA (Real Estate Regulation and Development Act, 2016). Although a positive move, the sector is still in its infancy stage when it comes to regulations. Nonetheless, India has seen a steady rise in real estate investors with the increased level of transparency. Yet, there are pitfalls which one must avoid.
In an insightful panel discussion of the Global Conclave for Indian Realty (GCIR), held on October 22 in Dubai, Virendra Adhikari, CEO, Asset India, Sunil Tyagi, Co- founder and Senior Partner, Zeus Law and Tanvir Shah, Founding Partner, Blue Triangle Capital explained the dos and the don’ts of investing in Indian real estate post RERA. The panel was led by Manisha Natarajan, India’s realty expert and Sudha Sharma, the Head of Special Projects, Network18, Digital who explored what Indian markets looks like for NRIs today.
“The market is definitely a safer and more regulated place today. There is an increased awareness and more transparency, leading to better deals. After RERA, a lot of defaulters faced the music giving way to better market players. However, the real results will be seen only in the next 3-5 years”, said Sunil Tyagi, Co- founder and Senior Partner, Zeus Law.
Agreeing to that, Virendra Adhikari, CEO of Asset India said that NRI clients are happier with the new regulations and are considering investing more confidently in the Indian realty market. He estimates a definite upward trend as far as investors are concerned.
Tanvir Shah, Founding Partner of Blue Triangle Capital, on the other hand explained how investing in commercial land in India will be highly beneficial. He was of the opinion that sunrise sectors like warehousing, hospitality and e-commerce will yield higher. Similarly a new trend of hotel apartments can be considered if the investors are looking for a good rent yield.
However, Tanvir Shah strongly recommended having a local Indian partner or developer, who has a good reputation to carry out the deals. This will expose the NRIs to a lesser risk.
Similarly, when considering residential property, Mr. Sunil Tyagi suggested to never go for deals that promise assured returns and always check if the project is RERA certified.
On that note, Manisha Natarajan implored the panelists to explain how investors can use RERA to their benefit. “Not many deep dive and actually check the RERA certification. In fact, all the details about the project are mentioned on the RERA sites, including the number of plots sold and the loan taken by the builder. There is no scope of being fooled, hence its ideal to check all the details” said Virendra Adhikari.
The experts collectively suggested that big ticket investors should opt for commercial land while those with lesser risk appetite should consider residential properties. “Not many know that SEBI regulates and protects the investors as far as commercial land is concerned” marked Mr Tanvir. He further added that the mantra for commercial land should be “Buy- Add Value-Sell”. On the other hand, for those investing in residential, Mr Virendra suggested to go by “Buy- Hold for a while-Sell”.
As definite dos, the experts advised to invest in projects that have sound infrastructure around. Also, every investor must do their due diligence rather than going by friends and relative’s advice. It would be ideal for investors to physically visit the place before investing. And lastly, investors should diversify investments and opt for a portfolio approach.