People of world’s largest democracy have spoken. As Modi 2.0 begins its second inning, the real estate sector gets ready to be on a fast track.
The reforms taken within last five years are now showing fruits in real estate. Segments including residential, office and retail have emerged stronger as a result of the developments so far while warehousing have emerged as another promising segment owing to renewed focus on globalization and industrialization. Clearly, growth trajectory of real estate sector is expected to go up.
Growth Story So Far Under Modi 1.0
The collective launch of Real Estate (Regulation and Development) Act (RERA) in 2016 and Goods and Services Tax (GST) in 2017 have had a significant impact on the real estate sector. As the buyers’ confidence returned, residential sector saw some rejuvenation with robust sales seen in 2018.
Sales went up by 42% vis-a-vis the sales in 2017 while new launches grew by 53% during the period. As per JLL Home Purchase affordability Index (HPAI) study, home affordability has increased significantly in the last five years due to rising incomes and stable real estate prices.
Expected Growth Trajectory Of Real Estate Under Modi 2.0
Stability and consistency along with steps taken in last five years are going to prove to be a boom for real estate sector in the coming times. Here is how real estate sector is expected to perform in 2019 and beyond:
· Sales are likely to receive a further push with progressive policies of the government. The first quarter has already seen a dip in GST which has led to slide in property prices bringing in fence sitters and expected buyers.
· JLL has estimated that Indian office space holds a potential REIT-able space of 294 mn sqft. Many more REIT launches in 2019 are expected.
· More and more newer institutional players in the commercial segment are likely to come up especially in co-working solutions.
· Owing to growing infrastructure status and GST implementation, the Indian warehousing and logistics sector is set to touch a stock of 344 mn sq ft by 2022, more than double the current capacity of 169 mn sq ft. Warehousing is expected to attract US$ 10 bn investments over the next 4-5 years.
· As India’s position improved significantly in ‘Ease of Doing Business’ by World Bank Doing Business Report (2019), there has been a in the number of investments received by the real estate sector.
“We are confident that institutional investments in 2019 will nearly double to US$ 10 bn as compared to 2018,” says Ramesh Nair, CEO & Country Head, JLL India.
Real Estate Sector’s Expectations From Modi 2.0
The market has high hopes from the new government like:
· Uniformly implementing RERA regulations across the states to improve buyers’ confidence
· Creating a single window clearance mechanism at the National level for easy approvals
· Releasing the public land holding for the creation of additional affordable and mid-income housing
· Lowering interest rates, thereby, improving affordability, liquidity and boosting housing demand