The Indian realty sector is a significant contributor to India’s GDP and is the garrison of employment for millions of natives. This sector has been known for its resilient and robust stride even while the economy struggled to clock healthy growth over last year. Housing in particular, has been the domain which contributes more than 5% alone for the GDP. However, it longs for reforms, crucial for its optimal output to be realized in current times when the economy is showing signs of revival.
Moving forward, the Union Budget FY 2014-15 is opined to be real estate’s first milestone post the recently concluded general elections. This milestone has hopes tied for much needed reforms to effect transparency, clarity, elevation and recognition of realty’s stature which looms for many years.
A glance at the performance of realty sector over the last year:
Funding channels dried up along with the increased dependence on NBFCs (Non-Banking Finance Companies)
Raising funds from the capital market proved tough for the new entrants in the construction sector
In tandem to slowing economic activities, the residential sector took the brunt with decreased sales of residential units across metro regions
The Real Estate Regulation and Development Bill, 2013 came as a hope of respite to the current situation as it proposed for transparency and consumer right protection
Overall, the realty market emerged resilient to the slowdown when compared to other investment sensitive sectors
Expectations from the Upcoming Budget:
Industry Status: The real estate sector, as mentioned above, has been the spine of Indian economy and hosts foundation of growth for numerous ancillary sectors. This is the time for this sector to be bestowed an industry status for it to get out of the ‘risky’ grade and attract more investments
Monitory Policy: Reducing the base and repo rate would entail more funding for the upcoming projects and subsequently add to the expansion of residential sector
Credit Reforms: Credit Reforms: As reported by The Economic Times, there is an acute need to reform the transfer of ‘development rights’, service tax credit on construction activity and the mandate of parking 70 % sale proceeds in an escrow account to encourage the developer groups for more profitable development activities
Real Estate Regulation and Development Bill: Speedier ratification and implementation of this bill would be a positive move for streamlining of development activities, sustained flow of FDI and protection of consumer interest in realty sector
As the days pass by and the budget gets closer, the Indian realty sector gears up for a revived spell of easier funding and streamlined approval mechanism. Along with the rising demand of affordable housing and ample investments in the infrastructure domain, the Indian realty sector is all set to march towards expansion and growth in the coming years.
