After Modi government took over, the Real Estate sector of the country has witnessed a revival. Housing market in the country has seen a major boost as the government brought ramifications to curb the corruption which prevailed in the real estate sector. According to JLL, an American investment management company specializing in real estate, home sales grew by 40 percent in first nine months of this year. The residential segment was the driving force behind this growth in the cities like Hyderabad and Kolkata. “While the implementation of GST and RERA led to some initial challenges for developers, most of the issues have been addressed and the industry as a whole is aligned. Going by the data for sales and new launches in the January to September period, home buyers are no longer delaying or postponing decisions on buying homes,” said Ramesh Nair, country head, JLL India.
The Modi government brought ‘Real Estate Regulation and Development Act’ (popularly known as RERA) to effectively regulate the real estate sector. RERA favors the consumer, unlike the earlier existing frameworks which were in favour of builders. The projects which are under RERA are completely safe and secure. The government also amended Insolvency and Bankruptcy Code to bring the home buyers on par with creditors to take care of the people who paid the money to builders but did not get the property delivered for years.
The cities with small real estate market like Kolkata and Hyderabad grew rapidly. The housing market in Hyderabad grew by 277 percent and in Kolkata by 230 percent. The cities with large real estate businesses also grew but the growth was not that big, given the high base effect. Housing markets in Chennai, NCR, Pune, and Bangalore grew by 77 percent, 53 percent, 19 percent, and 12 percent respectively. “There is definitely an increase in confidence in the market amidst positive signs of recovery. This, coupled with stable pricing, augurs well for the industry and demonstrates the return of buyers’ confidence in the market, which has in turn prompted developers to launch new project,” Nair said.
The previous UPA government did not bring any strong law to regulate the real estate sector, because many of its leaders were directly or indirectly involved in big infrastructure projects. Billions of dollars of black money were being pumped into the real estate to convert into white money. The real estate sector was in a complete mess with property prices in Mumbai touching the level of New York. Billions of dollars of black money were being pumped into real estate by corrupt businessmen to evade taxes. Now with property prices stabilising, it can be said that the RERA is transforming the housing sector.
The Modi government since coming to power took a series of reforms to end the lawlessness in the infrastructure sector. The government brought ‘The Real Estate (Regulation and Development) Act’ or RERA to regulate the real estate and then demonetisation to curb the investment of black money in infrastructure projects. The positive steps by the government is set to lead the regulated and transparent development in the real estate sector. The housing will get cheaper in the country due to these reforms. The sound economic growth in last few quarters has led to the rise in disposable income of households. The rising income coupled with low housing prices has been a boost for the housing sector across cities. Real estate is among the largest employer of unskilled labor force and therefore, growth in housing sales will generate employment for the people at the bottom of the pyramid.
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