Effect of RERA on Profitability of Indian Real Estate Developers
Real Estate Regulatory Act(RERA) came into force across India on 1ST July 2017. Various state level regulatory
authorities were established to regulate the real estate sector of their respective states. RERA covers both existing and new
projects under its ambit. The Real Estate Regulatory Authority (RERA) was formed to bring transparency, accountability
and efficiency into this sector with the rights and duties of both buyers and developers being clearly defined. This paper
envisages to explore the economic impact of RERA on profitability of real estate developers.
Income statements from January 2017 to December 2018 are used to gauge the impact of RERA on profit margins of real
estate developers. The top 10 real estate developers by market capitalisation are considered as the sample for this analysis.
After using paired t test for analysis we conclude that thus disruption caused by introduction of regulation in the real estate
industry has impacted the profitability of Indian Real Estate developers significantly in the short term.
Key Terms - Financial Performance, Real Estate Developers, Real Estate, RERA, Real Estate (Regulation and
Development) Act 2016, Profitability, RERA Act 2016
JEL classification - G38