MUMBAI: Affodable housing may still be a few years away as projects set to be undertaken by the new Government could take three to five years to get ready and home price may rise in the short term as sentiment improves. Developers and investors are set to take fresh stock of their real estate plans in line with the new government's plan to develop 100 new cities.
"In their manifesto, they have spoken about 100 new cities and improvement in existing cities. Besides this, they have also said they will reinvest in existing cities and I think the urban agenda and housing will take a priority as these are close to Mr Modi," said Deepak Parekh, chairman, HDFC.
Sunjay Dutt, MD, Cushman & Wakefield, says the creation of new cities would also require addressing creation of employment, infrastructure and other economic activities besides providing housing. "This will address the need for increasing migration to only a few cities, which has been putting pressure on the infrastructure. As pressure from migration eases, demand for housing in these cities will also come down," said Dutt.
The creation of new cities will provide an opportunity to developers to expand to new markets. "A fallout of this is that the manufacturing sector will also get a fillip as the new towns may not initially be able to attract the services sector," said Dutt. He adds that this will happen only in the medium term of three to five years.
Anshuman Magazine, CMD of CBRE (South Asia), said, "The election results will certainly improve sentiment in the real estate market." The formation of a stable government not dependent on coalition partners would hopefully mean faster decision-making and economic reforms, he said. If GDP growth picks up, one of the early beneficiaries would be the real estate industry, Magazine added.
This means that in the short run, there is also the possibility that in cities like Mumbai, real estate prices might actually firm up. "In Mumbai, we do not see any price correction because there is no supply. This is partly because of policy paralysis in the municipal corporation as permissions are not forthcoming and there is not much of redevelopment taking place," said Deepak Mehta, a real estate broker in Andheri.