MUMBAI: The government’s various policy and reform initiatives over the past two and half years aimed at improving transparency and ease of doing business in the realty space will infuse the much-needed confidence and trust in the sector, said industry participants.
The moves related to Real Estate Regulatory Act, Real Estate Investment Trusts, smart cities, Goods & Services Tax and the most recent demonetisation will eventually boost the demand for real estate, which has the maximum linkages to other industries after agriculture.
In its mid-term performance analysis for the Modi government’s realty-specific initiatives, international property consultant JLL India rated the reforms at moderately successful level, expecting faster implementation of the same.
“The recent demonetisation drive has definitely helped the government score well on regulations and transparency. We have taken a holistic view of the continued political will towards reforms in the real estate sector — and the very real challenges the government faces. Improved transparency will drive increased participation by institutional investors in India. With strong linkages between regulations, transparency and real estate, we assign it a high weightage,” said Ramesh Nair, COO — Business & International Director, JLL India.
The most imminent change that will impact the sector in the years to come is the implementation of RERA that will increase transparency, which in turn will bring back homebuyers’ confidence.
Given that investments are extremely crucial for a capital-intensive sector such as real estate, policy initiatives on Foreign Direct Investment liberalisation, interest rates, REITs and private equity flows, etc., have a strong bearing on the overall investment scenario.
“The reforms such as RERA, demonetisation and steps to improve ease of doing business have ushered in higher transparency while discouraging a parallel economy. This will prompt developers to focus on completing their projects in a time-bound manner thereby increasing customer confidence,” said Rubi Arya, Executive Vice Chairman, Milestone Capital Advisors.
According to her, as the property sector has been subdued for some time now, it offers for institutional investors an opportunity with better pricing and falling interest rates.
The long term fundamentals are also looking intact due to increased transparency and governance thereby providing attractive returns on investments in real estate as an asset class.
Realty developers agree that they will have to adjust to the new environment. However, they are also hopeful that in the long term, all of these factors will help strengthening the sector.