May 1st marks a new beginning for all the stakeholders of real estate, wherein they will find the terms like compliance, transparency, and proactive reporting not just corporate jargons, but an integral part of their daily business. RERA has become fully effective across the country from 1st of May, though few states are yet to notify them.
The prime objective of RERA is to bring the much needed transparency and accountability in this sector. If the act is not diluted by the states and implemented as notified by the center, it will definitely boost the buyer confidence, as project delays, fictitious project launch and ambiguity in pricing will become a past worth forgetting. Though the builders might find RERA compliance a bit cumbersome in the beginning, it will provide the much needed impetus boost for their business in the long run.
In the coming few quarters, we are definitely going to see consolidation happening, where small players will merge with bigger entities as well various under construction projects of smaller players will be taken over by stronger entities. We might see the number of builders/developers coming down, but the construction activity will definitely gain momentum once the impact of all the finer aspects of RERA is fully understood and absorbed by the builders. The dust is expected to settle down in quarter, once the grace period of three months for the existing under construction gets over.
The brokers who are an integral part of the eco-system will also now be held accountable for any kind of fictitious dealings. It’s going to be an interesting phase for them as well. They cannot do any business till the time they do not register themselves with their respective state bodies, by furnishing details like PAN card, educational background, and paying registration fees. Apart from this they will be answerable to the consumer grievance tribunal for any kind of violation. These measures will help in improving the image of brokers in the mind of buyers, as well as encourage brokers to adopt a more consumer centric approach.
As far as the buyers are concerned, it is the perfect time end users who have been waiting for a while now for RERA to come into force. With increased transparency and assurance of timely delivery the transaction volumes will start to pick up a coming quarter. The buyers hoping for a further reduction in prices might be bit disappointed as we might see the prices firming up especially of the projects of tier I builders. Also, the new launches happening post RERA implementation will have the cost of compliance embedded in the price.
Though, the builders and brokers community might look bit anxious as they are still awaiting to analyze the full impact RERA post May 1st, it will definitely help the real estate industry in India to embrace the much needed corporatization, and higher level of professionalism in the way they conduct their business. The aftereffect of this short term pain is definitely going to be a positive one in the form of buyers coming back to the market, and the much needed institutional participation in project financing for builders.
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