AHMEDABAD: If regulatory changes have been a cause of concern for the developers in the Gujarat real estate market, the political uncertainty prior to the general elections definitely threatens to prolong the slump in the realty market. Elections and real estate market have a symbiotic relationship where elections bring a kind of stasis that is unproductive.
Moreover, realty business is very much dependent on the power houses for each and every clearances and NOCs, thus the market is always very conscious of the paradigm shift in the policies if a new government takes charge. Further, the general elections of 2014 hold more significance for the sector for reasons more than one.
The real estate sector has been looking at the formation of next central government and its policies with reference to the pending bills like regulator bill and land acquisition bill and is a anticipating due to political uncertainty. The sector is also conscious of the fact that any policy advocacy for rationalisation of the bills holds no ground if an unstable government comes to power. Also with Gujarat chief minister Narendra Modi considered as a Prime Ministerial candidate, the Gujarat real estate market is curiously waiting for the outcome of the next Lok Sabha polls.
However, with the economy continuously sliding down and the prospect of an unstable government not being in a position to stem the rot, few analysts believe that in the short term, there won’t be any significant impact on the sector. That may be the reason why Anshuman Magazine, CMD of CBRE South Asia, believes, “The sector should not bother too much about the outcome of elections at this point of time since the sentiments in the market are any way down. Had there been a 2007 market with sentiments bullish, then there was reason to be concerned as any policy delay would have adversely affected the business. But today, when in any way there is an element of economy uncertainty, outcome of elections won’t affect much. Moreover, business will go on irrespective of which government comes to power.”
He adds further, “Of course, a stable government would mean fast track policies but at this moment I feel that more than the government, it is the market forces that is keeping the sentiments down and the impending elections are only keeping the developers anxious. But I don’t see any significant impact during and after elections as far as the fortunes of the sector are concerned.”
Manan Choksi, Regional Owner, RE/MAX Ahmedabad, on the contrary, believes, “The General Elections may bring windfall gains for Gujarat property market. In fact, as the PM candidate is from Gujarat and hence the government is set to show a lot of progress. Thus, there is a fair chance that the Gujarat property market may perform better than before in the election year.”
He adds further, “Elections and politics directly affect the sentiments which indirectly affect the property prices. No doubt, major investments have slowed down due to country wide policy paralysis and this will continue in election time as well. However, post election irrespective of which party comes to power, investments will flow in.”
Anuj Puri, chairman, CII WR Infrastructure, Real Estate & Construction Sub-Committee admits that the outcome of the general elections would definitely have some influence on the market.
“Important regulations related to the real estate sector are still in between the approval and implementation process. I am confident that the dire need for seeing these regulations through is recognised and acknowledged in the right quarters. The delays may also because of the fact that every industry angle needs to be considered in such regulations so that they are not overly skewed or draconian towards any side, but holistically oriented towards growth,” says Puri.
Given the fact that the elections are dominating the political climate, it raises two schools of thought in the real estate market. Firstly, the prolonged political uncertainty will cause caution and hesitancy in the sector beyond a traditional election. Secondly, with the election mood set so much in advance, the marketplace will absorb the thought of election and its likely impact much more easily.
It is not just the next government’s economic policies that will be a key driver of the health of real estate, but the new government’s policies with respect to the pending realty bills in the Parliament will also decide whether the houses will be affordable or the supply side constraint borne out of new policies will kill the golden goose that promises to contribute significantly to the state GDP.
In any case, the new government has a couple of real issues of real estate to address, and that is what keeps the sector guessing as of now. Elections or no elections, developers are always dependent on the authorities, who give approvals. However, Gujarat real estate market this time around has an altogetherdifferent reason to smile even though being caught between the regulatory changes and political uncertainty as the prospect of prime minister from the state may provide new wings to the sector.