After the swearing in of the Modi Government, India’s hope was high, especially in the economically weaker sections as he pledged about the mission of “provide shelter for all by 2022”. To Encourage this mission and to boosting the affordable housing, loan amount of Rs. 4, 000 crores were announced for the accommodation of the urban poor and the economically weaker sections through the National Housing Board (NHB) with the intention of increasing the flow of cheaper credit to the poor sections of the urban society. Slum development was added as a Corporate Social Responsibility in the private sector to garner initiatives.
The buzz of building smart cities also started building up after the NDA government came to power in May 2014. The finance minister Arun Jaitley set aside a sum of Rs. 7, 060 crore for building up of about 100 smart cities in India by the year 2022. With India stepping into the IT era and the new cities being developed and with the rapid pace of migration from rural places to cities, the infrastructure of the cities also have to be developed in tandem to accommodate the bustling pace of immigration.
The opinion goes that the Indian market is not yet ripe for the Real Estate Investment Trust (REIT) to operate but SEBI has already notified the norms for launching REIT funding and in efforts to bring more flexibility the newly sworn government is expected to bring hopes to the real estate sector.
Keeping in mind all these developments in the social and political scenario there are few points that the real estate sector is looking forward to that can help the industry to grow.
An interest rate cut:
In the Q2 and Q3 of 2014, the real estate sector was waiting for the customer to respond with the calls and enquiries pouring in but the conversion to sales were really slow. The outcome was that unsold stock piled up with few cities even witnessing lowering of prices of high end flats and apartments and selling it to the mid segment with few alterations. The market watchers felt that the buyers are waiting for the market to become stable and may respond if there is a trigger like interest rate cut or GDP increase or the like. RBI also could not respond to the demands of the real estate sector owing to the reasons of bringing the inflation under control.
Now that the inflation rate is under control, the RBI is expected to slash rates as was hinted by the RBI governor as the buyers of real estate sector were keeping away from purchases owing to high rates of interest and escalating property prices.
Infra Status:
The infra status for the housing sector would make the products more competitive in prices from the end user perspective and the developers would receive a boost for more sustainable development of property with emphasis on affordable housing.
Incentive for Affordable housing:
The need for affordable housing is the need of the hour as incentives were announced in 2015 Budget and the market would certainly entertain more projects in the affordable housing sector.
Development of Infrastructure:
The need for the real estate sector is infrastructure development as the prices and the demand of real estate is directly linked with infrastructure development like development of roads, highways, metro projects, railway, flyovers etc. New and emerging corridors of different cities of India with rapid development of infrastructure is already attracting lot of buyers and projects with the demand of housing on such places being on the rise.
Infrastructure is also needed for the sustenance of the employment generation ability of the area and to retain the corporates which in turn keep the demand for housing and commercial real estate ticking.
Relaxation in (FDI) Foreign Direct Investment:
The recent relaxation in the FDI was a great relief for the real estate industry with the real estate sector of India already being optimistic in foreign investment. The real estate domain has already witnessed interests shown by NRIs and HNIs with investment with few of the developers but the industry definitely expects more as it can cater to the industry demands with this fresh liquidity and can quickly finish the construction of unsold inventory.
Regulatory Bill:
The market watchers and veterans feel that the implementation and enforcement of the real estate regulatory bill will certainly make the real estate constructions more speedy and the transactions more transparent. The authorities will be able to track every project as developers and builders have to register all the projects with the regulatory authority before commencing construction.
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