How Modi 2.0 Will Reshape Real Estate In Next Five Years?

The Narendra Modi-led National Democratic Alliance is set to form the government for the second time in a row, trends show. India’s real estate sector will certainly benefit when Modi comes back to spearhead the government at the Centre.

How so?

On the right course

Several projects aimed at providing housing to the country’s marginalized sections that were launched by the Modi government are still underway. These include the smart city mission, the housing-for-all-by 2022 mission, etc. Modi’s second coming would mean work on these will continue without any interruption. This is the kind of stability India’s economy in general and real estate in particular needs at this juncture.

This would be a motivation for India’s real estate developers, too, who have been keenly waiting for the election outcome for clarity’s sake. Project launch schemes that were put on the backburner would take the front seat now. Better clarity on goods and services tax-related issues would also help them sell their existing housing stock faster.

“In the long run, we expect the sector to grow in terms of earnings and homes delivered. We hope that policies introduced in the previous term such as the GST and the RERA are seen through and implemented smoothly in this term. Further, we hope that the new government puts the economy at the forefront and continues to carry out reform in the realty sector by creating jobs and augmenting growth,” says Farshid Cooper, managing director, Spenta Corporation.

The new government is also expected to bring better clarity in terms of the real estate law and the insolvency code.

“The government needs to harmonise the working of the RERA and the IBC- multiplicity of legal proceedings needs to be avoided. The government needs to deliberate if it would be prudent to vest exclusive jurisdiction for all disputes between developer and purchaser with the RERA. At present, flat purchasers have the option of approaching consumer forum and the National Company Law Tribunal (NCLT),” says Abhishek Sharma, partner, Cyril Amarchand Mangaldas.

Banking on better future

Large-scale delinquencies have led to banks and non-banking finance companies fighting shy of lending to real estate developers, putting further stress on the cash-starved sector. The developer community expected the new government to resolve that issue, too.

In its previous stint, the government largely focussed on planning and building highways and expressways to connect the interior regions of states. With the NDA coming back to power, these plans will shape up, boosting property markets along the corridors in Tier-II and Tier-III cities.

The new government will also have to streamline norms on development projects taken up in areas where tribal rights are involved. Several infrastructure projects which involve diversion of forest land for non-forestry purposes have been stalled because of unclear compensation rules and environment clearance policy under Forest Rights Act.  

"The strong and steady government should bring about stability with remedial actions without much delay to revive the shock of last quarter economic growth. The stable government reflects the faith reinforced by the aspirational India which enhances the confidence index domestic as well as globally," said Dr. Niranjan Hiranandani, national president - NAREDCO