Govt’s fiscal measures likely to boost realty sector in 2020; these factors may hold sentiment high

Published: December 17, 2019 6:39:14 PM

Transparency and accountability have gone up by several notches, making investors and consumers slightly more confident about the market.

real estate, construction, building houses, flats, govt fiscal measures, nirmala sitharaman, Slashing of corporate tax from 30% to 25% has also contributed towards boosting market sentiments in real estate.
  • Honeyy Katiyal

The year 2019 has been like a roller coaster ride for the real estate sector. On one side, the industry sentiments have faced a downtrend due to the existing pressure, uncertainty, and ambiguity arising from market challenges. On the other side, some green shoots have surfaced due to the slew of measures and announcements by the government during the later part of the year.

Transparency and accountability have gone up by several notches, making investors and consumers slightly more confident about the market. Affordable housing witnessed comparatively more traction than the luxury segment. Starting from the budget, the government gave clear signals to boost affordable housing; it focused on the availability of lands at concessional rates to develop affordable housing. These initial steps will positively bring back buyers to the market in the coming two to three years.

The announcement by the Reserve Bank of India to link home loan rates with repo rate need to be propagated by real estate players. With reduced repo rate, banks should pass on the benefits to consumers by reducing interest rates on home, auto, personal and other forms of loans. The government also needs to ensure that the rate cut benefits are passed to housing loan seekers leading to a push for the people sitting on the fence to make their buying decision at the earliest.

Slashing of corporate tax from 30% to 25% has also contributed towards boosting market sentiments in real estate. Along with the other sectors, real estate too needed such a step by the government in order to promote more investment and growth in the sector, thereby boosting the economy. Additional profitability within companies will help them incentivise their employees and will help improve confidence to achieve better results in improving marketing and sales. Overall this will accentuate a positive sentiment and bring customers back to the consumption of affordable housing which is also the priority for government and developers.

The series of government announcements on NHB raising liquidity to housing finance companies, relaxation of ECB funds, approval on INR 25000 crore to provide funding to the housing real estate has been a great move by the government. It boosted the sentiments in housing real estate surely. Homebuyers over the last two years have been forced to pay EMIs on loans taken for purchasing homes without getting possession. Covering 1,600 projects with 458,000 dwelling units under the announcement will not only help in boosting buyer sentiments but generate considerable employment. All in all, real estate needs to bring back its lost sheen and become the favourite asset class for investments.

2020 should mark the beginning of a new growth story with a positive outlook. The sector is likely to witness a boom and also raise the demand amongst the buyers. With the government’s support, we expect the challenge of unsold inventories to get sorted. With the right implementation and planning, we expect the real estate sector to meet the existing challenges and rise to newer n greater heights.

Honeyy Katiyal is the Founder of Investors Clinic. Views expressed are the author’s personal. 

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