The Real Estate Financing Trends in India

Indian Real estate Financing industry’s scenario has witnessed a paradigm shift since the magical night of 8th November 2016 i.e. when the night Prime Minister Narendra Modi Ji announced The Demonetization followed by even mightier, revolutionary economic regulatory measures like RERA, GST & amendment in Income Tax act about Capital Gains Taxes in relation to revenue act which regulates Stamp duty collection by State Governments.

For any size of developer, colonizer, builder, Real estate industry had always been a huge capital centric segment with little or very low or negligible interference of RBI, SEBI or any other regulator as of now. This had led to mushrooming dubious fund raising schemes by such operators from small investor’s.

Bad experience from such unapproved, unregulated fundraising activities of various stakeholders had accumulated in form of thousands of litigations pending before every respective legal forum across India.

Financial year 2017/ 2018 onwards government came in mode of no compromise in compliance of all the regulatory measures, this led to another scenario of closing down business of unorganized dubious fly-by-night operators who were unable to adhere with the strict compliances ensuring financial safety of every stakeholders involved .Thus creating a huge supply shortage in the market as of now.

This in a way is good for overall industry in long run, the unorganized sector was creating an illusion of huge pile of inventory which they were pushing  at attractive offers through there very aggressive sales & marketing campaign and were mostly failing to deliver in there fairytale commitments.

Project financing & Retail Home Buyer financing was getting difficult in that phase where noncompliance was a major issue, thus there were lots of leads with the financing sales team but the conversation rate was very less. As well litigation risks were very high especially in Project Financing segment.

Financial year 2017/ 2018 and first 2 quarters of financial year 2018/ 2019 might have been very tough & lean for real estate financing business on either side, as every stakeholder in the whole real estate industry was going through compliance adherence issues.

Another latent change is coming due to massive road network construction drive by the government. NHAI & other respective  government bodies are undertaking  major land accusations for the same, which has infused huge capital in the hands of those  land owners who’s lands has been acquired for the same, most of these with huge capital in hand are land hunting now. Another salient feature has been this rapid increase in highways network has resulted in increase of circle rate for adjunct areas to these new national highways & ring roads. Both these issues has also led to increase in land prices drastically Pan India.

All this current corrective scenario is leading us towards a momentary supply constraint and a hungry buyer’s Latent Real estate sector in India by financial year 2019/ 2020, which will now be full of regulatory compliances, resulting in almost zero cash transactions by unaccounted money at any stage in the value chain; thus a booming segment for financing business both in Project Financing and end buyer financing as well.

About The Author

A dynamic & youthful Indian Businessman, Rajat Mohan Pathak is the CEO of Rajat Synergy Group who is bringing a mix of wisdom to the Pathak family business. Rajat is an active member of various trade bodies and government committees. He has been extensively featured at national and international platforms for various performances by both print and electronic media.

Born in Varanasi, India; Rajat attended St. John’s School. Then he enrolled into Bachelors in Business Administration at S.S.M.R.V College in Bangalore and also won the “Best Outgoing Student” Award for that academic session by R.V. Trust. In the year 2003, Rajat acquired his master’s degree in Internal Business from PSG institute of Management at Coimbatore.