While the stock markets, corporate world and a large section of the people seem to be celebrating the ascension of Narendra Modi, the real-estate experts feel the sector will see only a few euphoric marginal rises in prices, and even that will fizzle out soon.
One reason why prices may not rise immediately is that they are already very high in most of the major metros. Economic slowdown of the yesteryear has had an impact on salary revisions, and on urban buyers’ purchasing power. “Economic activity has to pick up and purchasing power has to rise before we see more demand in the housing sector. High interest rates are another deterrent,” opines Anshuman Magazine, CMD, South Asia, CB Richard Ellis.
The new Government also needs to get the Real Estate Regulation and Development Bill passed. The bill will revive the trust in the sector. Low trust in developers’ ability and intent to deliver a quality product on time is one of the reasons why buyers are staying away, complains, Sanjay Sharma, MD, Qubrex, a Gurgaon-based real estate consultancy.
While the new government cannot engineer a quick revival of the real estate sector, it can take several steps that would have a salutary impact in the medium to long term, including expediting the process of granting approvals to real estate projects. “We expect the new government to be more efficient in granting approvals to real estate projects,” says Lalit Kumar Jain, Chairman of the Confederation of Real Estate Developers’ Association of India (CREDAI).
Developers complain that the authorities, too, should be held responsible for not granting timely approvals to the projects which hampers completion and escalates prices. Further, experts are of the opinion that instead of being jailed for non-compliance of an economic offence, levying penalty would do much better.