Slowdown In Real Estate Temporary But Reforms Hold The Key To Revival

Why is the Indian realty sector still struggling for a major revival? What are the factors and issues, which are holding back the sector? The latest disruptive step by Prime Minister Narendra Modi to curb the black money by demonetising Rs 500 and Rs 1000 bank notes will certainly benefit homebuyers and regulate real estate prices. The announcement may not go down well with the developers but the common citizen would be able to think of buying a house as the real estate prices may drop with a fall in black money.

Market experts believe that the total revival in the real estate sector is a mammoth task. Although few measures like industry status, single window clearance system and land acquisition bill may help in addressing the issue to a certain degree. 

Is it right to say that the real estate sector is ailing? Manoj Gaur, President CREDAI -NCR & MD, Gaursons India Ltd. points out, “The sector cannot be called 'ailing'. Definitely there is a slowdown but that is a feature of any performing industry or sector as it cannot keep performing at its peak every time. There have been considerable lapses from all sides, be it the government, the developers or the buyers when one picks up the case study of the real estate sector in our country. There had been no great enthusiasm from the administration while looking at the prospects this sector holds and what could have been a much better scenario had there been proper guidelines in place from the very beginning. Now, with Real Estate Regulatory Authority (RERA) a reality across the nation, things are set to get better by the day.”

The definite motive of RERA is to protect the interest of homebuyers and to limit the corruption level in Indian real estate sector. The government has started taking necessary steps to boost the housing sector more. “There has been substantial push from the current government in the past couple of years which goes a great way in establishing that they are taking the sector on a much serious note. Relaxation of FDI norms and allowing PPP models in infrastructure projects on a larger scale has eased the way of doing business in the real estate sector for both domestic and international firms. Along with this, the government's initiatives like the Smart Cities Mission and Housing for All (AMRUT) is destined to give this sector the much-needed boost,” says Deepak Kapoor, President CREDAI-Western U.P. & Director, Gulshan Homz.  

For over many years the common man (buyers) has been seeking strict laws against the illegal constructions and the fraud developers who are eating away their money. The government should also put in place clear laws that direct the ownership of land. 

“The visible improvement being slow can be attributed to many reasons and one of the main being the rectifications which have been incorporated are being done from the grass root level and the fruits to bear at the top will take some time. Also, with RERA stepping in recently, sentiments have started to get better in the sector and buyers seem to be more confident than earlier. This confidence level to reach its optimum will require some time,” points out Vikash Bhagat, Director, Airwil Infra Ltd.

It is not the buyers who are facing the problems, developers too have their own dilemma. They are facing complications in getting the mandatory approvals and the necessary clearances on time. Therefore, it is the government's responsibility to ensure a single window clearance system to permit the sector to work in a more organised way. 

“With GST all set to roll out from April 2017 and RERA being formulated in all the states, other key areas which need urgent attention are single window clearance system, land acquisition bill and industry status. Single window is a must because, in its absence, a fully functional RERA would be next to impossible. Industry status would in turn ensure regularity in the sector which has been since the starting days as real estate is considered one of the most unorganised sectors in the country. A great amount of work also needs to be done in promoting REITs and PE Funds,” says Kushagr Ansal, Director, Ansal Housing. 

It is certain that recovery steps are being put in place but how far and how soon the outcome can be witnessed is uncertain.