What Realty Market really needs from Modi-fied Govt
Despite being just next to agriculture in terms of employment generation and contribution to the GDP, year after year, the sector’s hope of getting a status at par with industry is quashed by the government. But with Abki Baar Modi Sarkaar, even the real estate sector is looking forward to the ‘good days ahead of them’. Like every other industry, the realty market is also expecting to be Modi-fied as well.
In the Short term
– With country’s GDP hitting a nine year low of 4.5 per cent in 2013, the realty sector also painted a sorry picture. Unfortunately, the economic slowdown has taken a toll on the property market. Thus, the entire nation is looking up to Modi to get the economy back on track. And interestingly, the euphoria of Modi-fied India is already visible. Sensex that appreciated past 25K mark and the recovery of India rupee to 58.68 against the US dollar are two recent happenings that has managed to infuse some positivity in the otherwise sluggish market.
– Gradually after the economy recovers, interest rate on home loans should be worked upon.
– Speedy approvals is the need of the hour to clear the piling inventory in every city. As per the report by MHUPA (Ministry of Housing And Urban Poverty Alleviation), the approval process is extremely long drawn. For a housing project in a metro city, there are a minimum 34 regulatory processes to be followed by a developer for obtaining construction permits, which takes an average of 227 days or even more. This not only delays a project, but also increases the cost of property by 10-20 per cent. Thus, if there is single-window clearance, the approval process will become faster. This, in addition will bring in transparency in the sector and will also give a boost to the stalled projects.
In the Long term
– Infrastructure development holds the key for real estate growth. If Gujarat growth model is replicated and infra development is initiated as promised then Modi’s dream to build 100 cities with latest technology in infrastructure will effectively come true. This will have a positive impact on the Indian real estate market.
– Several major infrastructural projects are also planned such as Diamond quadrilateral, which will have high speed train network. Few other projects include Project Sagarmala, Eastern and Western Corridor. The work on the Freight Corridors Industrial Corridors are also expected to be accelerated.
– Streamlining the policies are also imperative. Be it Land Acquisition Bill, Land Pooling Policy or the Real Estate Regulatory Bill, to bring in more transparency and efficiency, all these regulations are necessary.
– As per the latest study by ASSOCHAM, India currently faces a shortage of about 18.75 million houses. Thus, affordable housing for all is the need of the hour. And interestingly, BJP in their manifesto promised that by 2022, there will be a house for every family in India. Well, when UPA government came in power, they had made similar promises, which never transformed into reality. Thus, now the nation is looking forward to Modi to fulfill this dream of slum-free India.
– There are lot of expectations regarding Goods and Services Tax (GST) as well. This is important because it will replace all the indirect taxes such as VAT, service tax, etc. Thus, as Central government will get the autonomy for collecting the GST, it will boost the logistics and warehousing sectors.
All said and done, one needs to clearly understand that change will come but gradually. However, defining and structuring a blue print of the growth measures is very important. Also, as far as the real estate sector is concerned, the change has to be brought about at both the government level as well as by the developers. When the former will initiate reforms in the sector, then only the latter will think about the price correction.
