With the introduction of Real Estate Regulation and Development Act, 2016, the market condition has completely been changed for Real Estate Sector now. The objective behind the enactment of RERA Act is to promote the fair practices of the builders and developers so that home-buyers can get rid of their hassles in property investments.
It is not being so long since RERA came into existence but we can evidently see the positive impacts on the market. Now the unbranded and debt-ridden realtors to forge alliances with large, deep-pocketed corporate developers; leading to opening up of possible lucrative opportunities for corporate entities as well as for growth and expansion purpose.
Another important factor under RERA guidelines is that, it bans transfer of money from one project into another and nor does it permits presale’s. Further, increasing compliance burden, have made it hard-hitting for many local developers/promoters to keep up the pace with the said Act and remain in business. Partnership deals and joint development proposals are pouring in for big corporate entities to expand their real estate ranges.
Max Venture’s Sahil Vachani (Managing Director), said that the working capital structure and nature of doing business is changing post-RERA, we would like to focus on joint development agreement rather than buying land.
Post-RERA formulations have lead Aditya Birla Group, step into commercial real estate development 2yrs ago by forming Birla Estates; Larsen & Toubro Ltd’s real estate unit L&T Realty has reached a few joint development deals. RERA has lead the builders/promoters to rethink about their strategic plans. Even Hero Group’s Hero Realty Ltd has received proposals from local builders for development purpose ever since RERA has come into picture.
The Big corporates, one with deep pockets, are much cherished with the introduction of RERA; their assets have gained more valuation ever since and that they are receiving more proposals for deals on regular basis. The companies have started shifting their strategies, from lending its brand without putting in any equity. Large corporate entities are eyeing upon various opportunities in the market. These entities are out to procure land and sightsee expansion opportunities.
All above can be concluded that “Post-RERA, it is a different era”. RERA is acting as catalyst for promoting the practices of Joint Ventures and Strategic alliances between big corporate tycoons and unbranded or local realtors.
Note – Please note that the above article is for education purpose only. This is based on our interpretation of laws which may differ person to person. Readers are expected to verify the facts and laws.
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