As Narendra Modi-led NDA government has completed two years, Property Expert looks into how much has the ruling dispensation contributed towards the development of the real estate sector in the country.
Riding on strong aspirations, Modiled NDA government stormed into power on 16th May, 2014 and Narendra Modi took oath as Prime Minister on 26th May, 2014. The kind of support and majority that he got, had taken
everyone by surprise. Such a clear victory was an example of faith and trust that the people of India had bestowed upon his government. It was crucial for the new government at the Centre to live up to such hopes. With the realty sector being a prime contributor towards Indian GDP and employment generation, the Modi government has always taken it on a priority and offered a lot of incentives over the last couple of years. Although, in the process of getting the best for this sector, a lot many misses have also been witnessed. But with the kind of adrenalin rush that has been provides by this government, coming years might bring more cheer to the country’s real estate sector. “The mandate with which the current government came into power was towards taking measures to revive the economic growth of India. This is clearly evident from the fact that
the country’s GDP has been constantly on the rise for the past two years. Some key aspects which can be prominently highlighted are the recent passing of the RERA, FDI liberalisation, getting REITs operational, and tax benefits for affordable housing segment in the country. Besides the above measures, the stability of the government has also given a confidence to the realty sector of this country and also to the people who are looking for investments”, shares Ashwani Prakash, Executive Director, Paramount Group. “A lot of expectations were lined up when the current government came into power. The government has worked substantially towards improving the state of real estate in the country. Various steps have been taken towards enhancing the scenario of supporting infrastructure in the form of roads, metros, waterways,etc. Also, DIPP has been working in close co-ordination with the government towards easing the ways of doing business in Indian real estate. This is evident from the relaxation of FDI policies for the sector. A lot is still there to be achieved but indeed work has been started in the right direction with the right motive”, says Manoj Gaur, President CREDAI-NCR & MD, Gaursons India Ltd.
Sentiments on a roller coaster
History has been a witness to the role that sentiments play in the real estate sector of our country. Buying a property is a decision of a lifetime and due diligence is a must for the same. In our country, buyers take time to
decide upon a property decision and look into factors affecting their target market and opinions from their primary or secondary circles. In the last couple of years, sentiments were witnessing ups and downs that had a direct impact on the demand for property across country. At one side we saw investors running out from the market due to falling prices, but end users became active due to the same reason. The Modi government brought in several policy reforms and incentives for the sector that went down as balanced decisions for this
sector’s buyers. “Actions of the central government for the realty sector have had a mixed impact on the sentiments of the buyers. The inclusion of black money bill and RERA, in these two years has caused a strong filtration which is making the investors escape. End users now feel much secured. Interest rates coming down by 150 basis points and banks also getting in the groove has cast a positive effect on the sentiments”, highlights Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz.
Government’s keen interest
The central government has taken up the realty sector on its priority list and has been keen towards addressing the needs of this sector. The seriousness towards promoting fair dealings in the sector through the passage of real estate regulatory bill recently and black- money bill last year has come out as a savior for all the interested parties in the sector, including foreign investors. Even the delays delivery by developers has been a strong issue where the Centre is contributing directly and coming out with remedies for the affected parties. Easing of FDI norms, escalating Land bill and GST, work on the infrastructure front,-Smart Cities mission and incentives for affordable housing have been the chief highlights over the last two years that show the interest of this government towards reviving this sector. “This government has left no stones unturned when it comes to promoting this sector on the forefront of the country’s economy. So many decisions that directly or indirectly impact this sector have been taken by the government that are big in nature and will take time to execute. The government has been pro-active in terms of providing next level infrastructure and an abode for all,through Smart cities and Housing for all. Also, key policy decisions have been implemented at national level that will revamp country’s real estate in the upcoming few years”, states Rupesh Gupta, Director, JM Housing.
Infrastructure serving as the backbone
In the last two years of this government, the word infrastructure was prominently visible and audible. The work for effective and efficient infrastructure across the country was rolled out with the government announcing
development of 100 Smart cities and 500 AMRUT cities, icing on cake coming with the decision on Smart villages. It was important that evolution of regions takes place where tier 3 cities are converted into tier 2, and tier 2 into tier 1. Development of a good infrastructure is crucial for the realty prospects of a region, and this government has plans to take it to the advanced level. For instance, the development on National Highways
across the country has gone up to 23 kms perday in these two years with a target of 44 kms per day by next year. Airports coming up with Indian railways going through stunning revamp, infrastructure at all ends in almost every region in the country has been looked into over the last couple of years. On the Smart Cities front, list of 20 + 13 cities has already been declared with the next set to be presented soon. An overall outlay of Rs.
48,000 crore has been kept aside for the project with thousands and lakhs of crores been planned to be spent on roadways, airways and waterways network. The 1,400-kms long road network will connect India with Thailand and Myanmar thereby allowing an international footprint with attraction of greater FDI. “To pick up the real estate in India, it was evident to tap every city that that required upgradation. Smart cities and AMRUT missions will provide indirect benefit for the realty sector through infra revamp. Once the infrastructure in the regions is in place, the acceptance of real estate will improve drastically. As many as 33 cities have already been picked up in two phases of Smart Cities mission with more to be announced. For AMRUT cities, funds have been allocated. The overall upliftment of regions across India has been visible in the last two years with so many plans still in pipeline”, avers Ashok Gupta, CMD, Ajnara India Ltd.
Policy reforms picking up pace
Real estate sector in the country has been extremely unorganised. The same had been taken up as a challenge by the government and reforms that could eradicate the loopholes were introduced. RERA now becoming a reality will go down as the biggest achievement of this government in these two years. GST bill
and Land acquisition bill are also lined up which will transform the Indian realty scenario.REITs to become operational, easing of FDI norms and 100 percent FDI in construction sector, coupled with major incentives
announced for affordable housing and rental housing in the last Union Budget speech will add to the credibility in the long run. In fact, the FDI inflow got doubled over the last couple of years and are slated to move up further. Smart moves through Make in India, Digital India and Start up India will increase the acceptance
quotient of our country that will open gates of higher supply in India. “Real estate sector is an end user to over 30 allied industries and sectors and thus it is important that the government promotes business in other industries as well. For instance, if steel and cement business observes growth, then real estate is sure to perform. Our government’s work on the policies front has been tremendous where decisions like Make in
India and Start up India will promote FDI and domestic interest. Implementation of RERA will lead to fair dealings for the sector and enhance security for foreign nationals. If GST and Land acquisition also get a go ahead, things will become much more transparent”, elucidates Ankit Aggarwal, CMD, Devika Group. Although, these two years were missing out on a few points of the industry’s wishlist – single window clearance system and industry status for the realty sector. “Absence of a single channel for approvals has cost severely on several real estate markets of India. Places where this system is operational are working without any hassles. Once implemented across the country, project construction and timely deliveries will become prominent in the market. Also, rising property prices across tier 1 cities of India are somewhere resulting due to high interest rates that the developers bear. Once the industry status is granted, developers will borrow at much reduced rates, the benefit of which will be directly transferred to the buyers. These have been two big misses till now, but overall it has been great two years by the government for this sector”, explains Vikas Bhasin, MD, Saya
Future shaping up well
The Indian realty sector at present is undergoing a transition phase which is crucial from the perspective of buyers, foreign investors and overall image of the sector. With the kind of work that is being carried on the infrastructure and reforms front, future of Indian realty looks much secured with due patience required. “The real estate sector in India has been marred with some problem or the other but gradually in the last two years, after the current government came into power, things have slowly started falling in place. Sizeable amount of work is visible on the infrastructure end, be it affordable housing or the Smart Cities mission. Funds have already started flowing for AMRUT and construction of roads has been taken up on priority. The nation’s
response towards many initiatives taken up by the government has been enthralling which gives you an idea how the government has been able to connect with the masses”,
concludes Rajesh Goyal, Vice President CREDAIWestern