Sector experts believe that the sluggish demand in Mumbai will pick up once the new government is formed, paving way for more investments and liquidity in the sector
The coming general elections which have been touted as a potential game changer is being awaited not only by political watchers in India and abroad but also by the various industries and sectors, including the real estate. The struggling industry is going through varied emotions of nervousness and anticipation about the outcome of the election results and widely speculating the impact it could have on the industry; perhaps more positives than negatives. It is been widely speculated that the sluggish demand will pick up once the general election in the country gets over and the new government is formed, paving way for more investments and liquidity in the sector .
“A stable government, motivating leader, can move the entire economy. Sentiments alone in this case will drive the market,” says Lalitkumar Jain, CMD, Kumar Urban Development Ltd (KUL) and Chairman, CREDAI.
According to him, there is pent up demand, but what is needed is a stable economic outlook and confirmation of growth oriented governance, reduction in interest rate, job security and reduction in inflation to make it happen. “I see a huge surge in demand and rate increment post election,” he reiterates.
According to Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India, the outcome of the upcoming general elections will definitely have some bearing on whether the market will pick up speed, continue at the current pace or slow down further.
“The reason is that the political stability and proactive reforms that can come on the heels of a general election can render the real estate market more conducive to growth. In other words, the results of polls can have a direct bearing on market sentiments,' he says.
Puri explains that one of the reasons that foreign funds that have deferred deployment into Indian real estate are waiting for, is political stability and a more investment-friendly environment.
“To enable the Indian real estate sector to meet its massive capital requirements and capitalize on the opportunities for large-scale real estate developments, the sector needs investor-friendly, streamlined policies from the Government,' he says.
Important regulations related to the real estate sector are still hanging fire and awaiting full approval and implementation. “Regardless of which party is voted into power, I am confident that the dire need for seeing these regulations through is recognized and acknowledged in the right quarters,” adds Puri.
As per Bharat Dhuppar CMO, Omkar Realtors, real estate buying is a large ticket item and any kind of stability brings back the investors’ confidence ensuring sales. “In this country general elections are always linked to uncertainty in the markets. The formation of a new government results in potential upside clubbed with a bounce in customer confidence resulting in positive momentum attracting more investments and boosting sales in this sector,' says Dhuppar. “The demand is likely to be in the range of 10-15% annually,' he says.
Dhuppar feels that the demand will always be there across the city for projects which offer world class amenities, strategic location, having easy access to road, railway & improved infrastructure for faster commuting in the city clubbed with health quotient.
Pankaj Srivastava, COO, Maitreya Realtors & Construction explains that the demand for homes has always been high in the Mumbai Metropolitan Region, as only a limited supply of land is available.”However with the focus on the infrastructure development the connectivity to places has improved a lot, and people are looking at places beyond the city for investment limits,' he says.
“South Mumbai / Lower Parel / Dadar / Worli / Bandra are the places where you could look for investments in the higher end from Rs 4- 5 crore onwards, says Srivastava.
Some of the other areas would be developing with the new infrastructure projects getting completed are along the Metro route of Versova – Andheri – Ghatkopar. The Mono rail would boost the demand along Wadala, Chembur area.
Navi Mumbai with the metro and upcoming airport makes Nerul Seawood Panvel areas good for investment. The Multi Modal Virar- Alibaug Corridor opens up good investment opportunities in Virar / Bhiwandi, he explains.
Tanveer Shaikh, Principal Consultant, Acumen Business Consulting, says that the segment that has taken the biggest hit in the recent times is commercial real estate in Mumbai. “Buyers/leasers have been postponing their decisions and have been on a ‘wait and watch’ mode in these uncertain times. This is one sector which would see better light post elections,' says Shaikh.“BKC and Parel are the areas that will see better absorption if developers are smarter on their pricing strategy,' he says.
HDFC raises US$ 300 million ECB under the low cost affordable housing scheme
A first by an Indian Housing Finance Company, Housing Development Finance Corporation Limited (HDFC), India’s largest housing finance company with assets of over US$ 35 billion and a market capitalization of US $ 20.5 billion has raised External Commercial Borrowing (ECB) of US$ 300 million from a consortium of 4 lenders, State Bank of India (SBI), Sumitomo Mitsui Banking Corporation (SMBC), The Bank of Tokyo-Mitsubishi UFJ, Ltd. and DBS Bank Ltd.
The ECB which is in the form of a syndicated loan facility under the low cost affordable housing scheme of Reserve Bank of India. RBI in December 2012, permitted to HFCs/ NHB to raise ECBs for financing prospective owners of low cost affordable housing units. Low Cost Affordable Housing units have been defined as units where the property cost does not exceed Rs 30 lakhs, loan amount is capped at Rs 25 lakhs and the carpet area does not exceed 60 square meters. RBI has prescribed an aggregate limit of USD 1 billion each for FY 14 & FY 15 for ECBs to be drawn under this window. HDFC’s borrowers are predominantly middle class individual households.