MODI GOVERNMENT’S TWO YEARS OF REAL ESTATE
Riding with strong aspirations, Modi led NDA government came storming into power on 16th May, 2014 and our Honourable Prime Minister Narendra Modi swore oath on 26th May, 2014. The kind of support and majority that it came up with, had taken taken everyone by a surprise. Such a clear victory was an example of faith and trust that the people of India had bestowed upon a government returning to throne after a decade. With such hopes, it was crucial that the new government at the centre performed upto the mark. With the realty sector being a prime contributor towards Indian GDP and employment generation, Modi government has always taken it on priority and offered quite 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 proved by this government, upcoming years might bring more cheer to the country’s real estate sector.
“The mandate with which the current government came into power was than encouraging 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 is another aspect which has been looked at in details, getting REITs operational was also a big milestone in the tenure of this government and tax benefits have also been started towards affordable housing segments 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 basis the promises that were made when the current government came into power. The real estate sector was the highest expectant out of all the sectors with the weight of providing roofs to the human race. The government has worked substantially towards improving the state of real estate in the country. Various steps have been taken towards enhance 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 to a great extent 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”, enlightens 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 looks 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 becoming active due to the same reason. Modi government bought in several policy reforms and incentives for the sector that went down as balanced decisions for this sector’s buyers. The promise of ‘Ache Din’ for the country has been taken by the stakeholders in the realty sector as a dual thought. “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. But this act in turn, has caused more security towards transacting and thus, end users feel much secured in this sector. Interest rates coming down by 150 basis points and banks also getting in the groove has played a positive part 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. Never has a government poked so much in the decisions affecting the buyers and stakeholders. The seriousness towards promoting fair dealings in the sector through the passage of real estate bill recently and black money bill last year has come out as a saviour for all the interested parties in the sector, including foreign nationals attracted towards India. Even the delays in possession 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 has been the chief highlights over the last two years, that shows the interest of this government towards 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. But the start has been very careful and full of key decisions that affect the sentiments of the buyers. 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 came 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 take place where tier 3 cities are converted into tier 2, and tier 2 to 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 country has gone upto 23 Kms per day 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 touched and 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 that every city that remained untapped or those that required upgradation, were kept on check. Smart cities and AMRUT missions will provide indirect benefit for the realty sector through thorough infra revamp. Once the infrastructure in the regions setup, the acceptance of real estate will improve drastically. 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 our country has been extremely unorganised. The same had been taken up as a challenge by the government and bring in reforms that could eradicate the loopholes pertaining here. 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 renovate the Indian realty scenario. REITs to becoming 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 onto the credibility in the long run. In fact, the FDI inflow got doubled over the last couple of years and is looking towards more upward movement. 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 add onto fair dealings for the sector and enhance security for foreign nationals. If GST and Land acquisition also gets 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 where Single window clearance system and Industry status for the realty sector has been a long pending request of the fraternity. “Absence of a single channel for approvals has costed 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 Group.
Future shaping up well
The past two years of Indian real estate sector under Modi’s headship has undoubtedly seen a much transparent picture and is sure to witness an unprecedented growth in the upcoming years. Indian realty sector at present is undergoing a transition phase which is crucial from the perspective of buyers, foreign investment 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, pieces have slowly started falling in place. Sizeable amount of work is visible on the infrastructure end where work is carried out on all aspects, 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 and infact, efforts are being made to push productivity on these fronts. The nation’s response towards many initiatives taken up by the government has been enthralling which gives you an idea that they are able to connect with the mass and attend to their appeals”, concludes Rajesh Goyal, Vice President CREDAI-Western U.P. & MD, RG Group.