With the results of the Lok Sabha elections 2019 showing a return of the Modi government with full majority of its own, the expectation across the realty sector is that of optimism. According to Rohit Poddar, managing director, Poddar Housing and Development Ltd and joint secretary, NAREDCO West, the real estate sector expects the new government, in its second term, to re-energise reforms related to infrastructure investment, land acquisition and speed up the regulatory functions of the state. “We expect the government to take measures to expedite and streamline environment clearances for new projects, which is a two-stage process and takes 2 to 3 years,” he says.
Impact of the past 5 years of the Modi government on realty sector
In the last 5 years, the Modi government unveiled the Real Estate (Regulation and Development) Act (RERA), to solve the issues of home buyers and to implement better legislation. They also implemented the Goods and Services Tax (GST), while the first real estate investment trust (REIT) was also listed during the 5 years of the Modi government. The impact of these reforms has been reflected in the number of investments received by the real estate sector, says Ramesh Nair, CEO and country head, JLL India. “Of the total institutional investments of USD 30 billion during 2009-2018, USD 20 billion was invested in 2014-2018. During the same period, the share of foreign investments more than doubled to 70% in 2018 from 31% in 2009. We are confident that institutional investments in 2019 will nearly double to USD 10 billion, as compared to 2018,” he elaborates.
Real estate sector’s expectations from Modi Government 2.0
GST and RERA
Experts maintain that the reforms introduced over the last 5 years, now need to be implemented, for the benefit of home buyers and the realty sector. “We hope that policies introduced in the previous term, like GST and RERA, are seen through and implemented smoothly in this term. We hope that the new government puts the economy at the forefront and continues to carry out reforms in the realty sector, by creating jobs and augmenting growth,” says Farshid Cooper, managing director of Spenta Corporation.
Although the GST rate was reduced to 5% for regular housing, the sector is hoping for a further relaxation. “The recent change in GST to 5%, with the abolishment of input tax credit, was detrimental for developers, as GST on the cost-side is still exorbitant and has not been lowered in tandem. Hence, the expectation is that the government, in its new tenure, shall reduce input-side GST rates, to restore shrinking margins of developers which took a hit, due to increasing costs and lower property prices in a bleak business environment, on the back of high unemployment, the NBFC crisis, ambiguity over GST and implementation of the RERA, all of which forced investors out,” points out Parth Mehta, managing director, Paradigm Realty.
Housing for All
Navin Makhija, managing director of the Wadhwa Group, adds that the government needs to continue to focus on its ‘Housing for All by 2022’ mission. “More focus is needed on completion of ongoing infrastructural projects, which will benefit the affordable housing clusters in the Mumbai Metropolitan Region (MMR). Such infrastructure projects will boost residential realty in and around cities like Mumbai,” he explains.
Start-ups and co-working spaces
In the last 5 years, start-ups in the real estate sector were responsible for making the concept of co-working spaces a big business. The developers and service providers in the co-working space, now expect more support to such start-ups and tax reforms, to aid their business.
“The government should focus on building start-up hubs across the nation, to drive entrepreneurship. It should also consider relaxing the regulatory compliance strings a bit and altering them to be pro-growth, as it is one of the biggest impediments to the growth of start-ups,” opines Manas Mehrotra, chairman of 315 Work Avenue, a co-working space provider. Overall, home buyers and developers express hope that with the Lok Sabha polls providing a clear mandate, decisions related to real estate and infrastructure will now have consistency and stability, to enable home buyers to own their dream homes.