Anshuman Magazine, chairman (South Asia), CBRE
New Delhi/Mumbai: Maharashtra and Haryana, the two states headed for legislative Assembly elections on October 15, have another thing in common. They are among the most prominent property markets and together are estimated to constitute 30-40 per cent of the pan-India real estate universe.
While the polls might not substantially impact the property prices in these states, these could slow down policy clearances and infrastructure projects critical to real estate, say analysts. Since the elections are coming just about a week ahead of Diwali, a time for the biggest real estate launches, those tracking the sector say there could be some changes and delays in new projects.
There's likely to be a short-term impact on real estate activity and approval processes because of these elections, says Anshuman Magazine, chairman (South Asia), CBRE, a global consultancy in the sector. "It is usual for project approvals to come to a standstill before elections." Even proposed policy decisions such as overhaul of the floor-space index in Haryana is likely to be delayed, he said. Infrastructure projects in the states could also be hit, affecting real estate.
A Cushman and Wakefield study put the total estimated unit launches at 172,500 across major eight cities of India in 2013. As for prime residential, Gurgaon made for 8,000 new apartment units in the first half of 2014, Mumbai 17,600 and Pune 5,000, according to CBRE data.
It also shows the National Capital Region, of which Gurgaon (Haryana) is one of the biggest chunks, constituted three million sq ft of new prime grade-A commercial supply in the first half of 2014 and Mumbai 2.2 mn sq ft, of a total of 14 mn sq ft across this segment in India. So, in grade-A commercial space itself, Mumbai and Gurgaon, the primary real estate drivers in Maharashtra and Haryana, together form more than a third of the pan-India new supply.
Developers are a bit cautious and do not want to dampen the Diwali spirits. Lalit Jain, chairman of the Confederation of Real Estate Developers' Association of India, told Business Standard: "In Maharashtra, the political system has no role to play on project approvals."
Niranjan Hiranandani, managing director, Hiranandani Constructions, said there would not be any perceptible change due to elections before Diwali. However, people would look forward to new policies in housing and incentives for affordable housing. Those policies would depend upon the result of the elections and who forms the new government. Many issues in real estate are governed by state laws.
The actual loss to real estate caused by policy uncertainties will be clear after the poll result and how quickly the new government is able to take charge, an analyst said. "The silver lining in all this is that the real estate market is already slow,limiting the impact of elections," he added.
Sanjay Sharma, managing director, Qubrex, a real estate consultancy, agreed. "It is a fact that property is not selling well," he said, and developers which had begun new projects had seen a perceptible weakness.
"There's no trigger for a price rise yet and no sign of investors showing bullish behaviour." In a situation like this, Assembly elections in Maharashtra and Haryana might not have a material impact on property prices, he said.
At the time of the Lok Sabha polls earlier this year, analysts had predicted the property market was going to revive in nine to 12 months.
There are optimists, too. Om Ahuja, chief executive, residential services, Jones Lang LaSalle, an international consultancy, said in recent weeks, a lot of new files had been cleared and new projects would be ready after the shradh period (ending September 23) and once the festival season takes off. "I don't think people are really bothered about elections when they make real estate purchase," he said.