Soon after polls realty sector unlikely to revive
After the new government takes charge the lackluster real estate sector is unlikely to revive soon. For concrete signs of revival experts are looking at a timeframe of anything between 12 and 18 months from the time of the new government. That too is conditional. An upswing in the realty sector will be possible only if the regime is not a cocktail of parties, point out experts.
From many of the previous ones the 2014 Lok Sabha election has been different as the takeaway from real estate into election economy has been lower than other times. This is because of a stricter vigil on expenditure related to polls by the Election Commission, according to a Gurgaon-based broker and analyst. Incidentally, the commission, attempting greater transparency, increased the expenditure limit per constituency this time to a maximum of Rs 70 lakh from Rs 40 lakh earlier. It is believed that even this year politicians have breached the spending cap, but by much less than during previous elections.
The real estate-election modus operandi works like this. Money goes out from builders to politicians in the form of loans around six to eight months before polls. A revival in property market is triggered immediately after polls as some of the money comes back into the system through investments in real estate. “Re-infusion into the sector will be limited since the money withdrawn has been less than usual this time,” according to a brokerage firm. A cartel could jumpstart the realty market, but it may not result in a revival, say experts.
Anshuman Magazine, chairman and managing director, CBRE India says the sentiment will improve if the poll outcome is a strong government. “But real estate cannot bounce back on sentiment alone unlike the stock market,” he says. For demand and revival in property economic fundamentals must improve and interest rates must come down, he adds. However, he cautions that if corporate land deals come under the scanner, it will hit the realty market.
Anshul Jain, chief executive officer of DTZ India, a prominent consultancy, agrees on this. Positive sentiments will not generate immediate liquidity in the residential market, he says. “For investors to come in it will take 12-18 months.”
Source: Business Standard
Anshul Jain, Anshuman Magazine, CBRE India, DTZ India, Government, Gurgaon, Investors, Lok Sabha Election, Real Estate Sector, Real estate-election, Residential market
