New Delhi: The world's largest democracy has gone to the polls to elect its new government. With all phases of voting almost complete, there is occasion for some reflection and anticipation. Thanks to the negative economic dynamics that the country has been ailing under, every industry hopes for better times ahead. There is a sizable burden of expectations on the new government, not least of all from the real estate sector.
To put it mildly, Indian real estate has been at the receiving end of stepmotherly treatment on all fronts. The sector is now perceived as unfriendly to both developers and buyers. Over the last few years, the real estate story has been a saga of missed opportunities, and a turnaround is definitely expected.
This can only happen if the new government takes the necessary steps to make the market viable for sellers and buyers again. There are a number of reforms that could collectively achieve this. For instance, the new government can put mechanisms for the fast-tracking of residential project approvals. This would go a long way in increasing supply and keeping property rates rational, especially in the larger cities.
In particular, the approval process needs to be sped up for affordable and mid-income housing projects so that Indian real estate can narrow down the massive and long-standing supply deficit in these segments.
It also needs to speed up infrastructure development. Many key projects are heavily delayed or pending, and infrastructure is extremely important when it comes to making real estate development viable in newly emerging areas as well as established areas that have stagnated due to infrastructure deadlock.
First-time property buyers need to be given better incentives for home purchase. The existing incentives are threadbare and nominal at best, and completely insufficient to encourage fence-sitting buyers. Moreover, the new government must take all measures to make green housing projects more viable for developers as well as buyers. Sustainable housing must become a viable and desirable alternative choice for a larger base of buyers so that demand for green homes increases.
Finally, the new government must reboot the regulatory framework surrounding real estate. As things stand now, the Indian real estate sector is far from being a desirable investment route for foreign funds. The two major reasons for this are unfriendly norms for foreign investment into real estate and the stubborn opaqueness of the sector itself.
While better regulation in context with Indian real estate will give it a better image and make it more attractive to both domestic and foreign funds, a revamp of the current investment norms will help in translating this renewed attractiveness into actual viability. The real estate sector cannot flourish if the current constrictions in the funding pipeline are not cleared up.
Arvind Jain is the Managing Director of Pride Group