Saturday, Oct 25, 2014

Realty looks for a revival

Written by Shruti Srivastava | Posted: April 12, 2014 2:56 pm | Updated: April 12, 2014 3:11 pm

As India queues up to exercise its democratic right to elect the next Lok Sabha, it is not just political parties and poll watchers who are keen to keep a count of the inked fingers. The depressed real estate sector is counting alongside, hoping for political stability and strong decision-making which could mark the beginning of a revival.

Across the industry, both developers and consultants agree that post-elections, the slowdown would give way to a much-needed spurt in construction activity, attracting the first-time buyers.

In the October-December quarter, the growth in the construction sector was an abysmal 0.6 per cent, as per the data from the Central Statistics Office. Production of steel and cement, which together have a weight of almost 9 per cent in the set of eight core industries, have also not fared well. While cement production remained below 6 per cent throughout the year barring one occasion, steel production could not rise above 7 per cent during the last fiscal.

“We are hoping for a stable government. With that, we expect the buyers to start investing again. After the elections, first-time investors should immediately move in because prices are expected to rise. We expect the market to improve dramatically on a stable government,” Navin Raheja, chairman, Naredco and managing director, Raheja Developers told The Indian Express.

He added that the election manifestoes of the two large parties have laid down several initiatives in the infrastructure space, which will act as catalyst for real estate activity.

The BJP, in its manifesto unveiled last week, has emphasised that its government will take steps towards the transport and housing sector for urban upliftment. It will initiate building of 100 new cities and expand the Indian Railways network, including covering a million plus cities by high-speed rail, among other initiatives.

In a note issued last month, ICICI Securities also said that while the outcome of the general elections in May would be crucial, better governance would lead to revival in infrastructure spending driving demand growth.

Sanjay Dutt, executive managing director, South Asia, Cushman and Wakefield, said, that the sector is affected by sentiments for a short period and takes a minimum of 12 months to see a positive change in economic fundamentals. “Before the boom, a buzz is witnessed,” said Dutt.

“The sales velocity and overall real estate traction comes back only after a minimum of 3-4 quarter-on-quarter results start depicting real growth in GDP, corporate profit, and increase in job confidence, Dutt added.

Experts agree that though it is unlikely for the change to happen immediately post-election, it will certainly improve the investor confidence.

“Post elections, if the economy looks stable, many fence-sitters would like to invest. There is a shortage of people willing to buy houses. People who want to buy a house for investment purpose would go in for it only when they have job security which comes from a stable government… if we see a positive mandate from the new government, we are going to witness a good third and fourth quarter,” said Getambar Anand, chairman and continued…

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