Promising Post-Poll Path For Realty

Now that it had renewed its mandate, the Modi government would do well to increase the price limit of affordable homes to enlarge the scope of affordable housing

The return of Narendra Modi as the Prime Minister for a third time in a row under NDA, will ensure political stability and continuance of reform-led policies to maintain the economic momentum conducive for the growth of the real estate sector.

Thanks to the favourable policies of the BJP government in the last 10 years, real estate is in a resurgent mode. This is clearly evident from the fact that 18 major listed real estate developers sold properties worth Rs 1.17 trillion during FY 24. Both developers and financial institutions/investors are bullish on the growth in the real estate sector. This is reflected in the improved realty sentiment index in Q4FY24. The residential market outlook is promising as it is in fast selling mode with significant drop in unsold inventory.

The office market outlook too remains buoyant as stakeholders are confident of good performance across leasing , supply and rent over the next 6 months.

What is equally promising is the investors’ faith in Indian real estate. India has secured its place amongst the top 5 global cross-border capital destinations for land and development sites. Between FY11 and FY24, The proptech sector has attracted investments worth USD 4.6 billion , registering a CAGR of 40 percent.

The NDA government under the leadership of Modi, is committed to live up to the confidence of investors and other stakeholders by continuously following the reform path. It is expected to not just undertake new reforms but also revamp key reforms like RERA and GST. The new government will have a cut out task to ensure the success of its flagship scheme of Housing for All. Affordable Housing which is a key to Housing for All, has suffered a setback on both demand and supply front. Due to spurt in land prices, homes got unreasonably costlier and unaffordable , leading to slump in demand. Developers on the other hand opted for luxury housing to protect their margins , in turn hitting the supply of affordable homes. While the share of luxury housing sales has jumped 3 times to 21 percent over the last 5 years, the share of affordable housing on the other hand has plummeted to 20 percent from a high of 37 percent during the same period.

Now that the home prices have soared , the government would do well to increase the price limit of affordable homes to enlarge the scope of affordable housing. The new government may well provide tax incentives on the tax front and cost of funding to both developers and home buyers to revive affordable/mass housing . It is heartening that during the interim budget the Modi government had announced a special housing scheme for the middle class.

Considering the commitment of the Modi government towards bolstering real estate and infrastructure as the engines of economic growth, it will do well on the policy front to ensure long-term sustainable growth of the real estate sector, meeting the goal of making real estate a USD1 trillion market by 2030.

(Vinod Behl is Editor At Torbit Realty)