The dust has settled on the elections drama and the BJP is now firmly in the driver’s seat. By and large, this is being seen as the best possible news for the Indian real estate sector – and rightly so. Narendra Modi has the business mind-set, background and also determination which are called for to bring India’s entire economy back on track. What the real estate sector now awaits is his policy approach to the issue of housing in India.
Now, as the country stands poised on the verge of a major change in economic climate, it is a good time to reflect on why boosting the housing sector is so important for the country. Economists typically measure economic health on various different parameters, including Gross Domestic Product (GDP), the momentum of the manufacturing sector, inflation rate, etc. However, in India, the appetite for home ownership can and must be included as an important variable.
The health of the economy influences people’s desire to either invest or hold on to their money. Since real estate is an investable asset class, forward momentum in the real estate sector depends heavily on economic climate. In fact, real estate is also a priority investment route in India, because the desire to own homes is extremely high in this country. It is also an extremely important vertical from an economic viewpoint, because the transacting of real estate generates massive revenue for the government. This revenue can, in turn, be used for the creation of infrastructure, reducing national debt and generally uplifting the country.
These aspects are extremely important from the point of view of the country’s ability to attract more investments from abroad. The Modi government is quite aware of this fact, and – in the interest of overall economic growth – is likely to remove all or most of the policy roadblocks that have been preventing the velocity of the housing sector in India.
This process will involve better incentives towards first-time home ownership, quicker approvals for residential projects, a sharp focus on the creation of affordable housing, boosting rental housing schemes, unlocking government-held land for development, putting infrastructure creation on the fast lane, and many more initiatives that the previous government had failed to address.
At the citizen level, these changes are going to bring very tangible positive benefits. With the increased viability of home ownership, more and more people will finally be able to live in self-owned rather than rented homes. Home ownership is not only a matter of pride and financial security, but is also an important fulcrum for social change.
People who live in self-owned homes are more responsible citizens – they are personally invested into their neighbourhoods, become actively involved in maintaining law and order and generally see themselves as stakeholders rather than detached audience members. Such citizens tend to join hands with the government as agents of even greater change at all levels.
The effect that the policies and actions of a government which is dedicated to boosting the economy with real estate as an important card in the deck can have at a city, state and finally national level must not be under-estimated. We are now looking at the real possibility of a revival in the economy, the infrastructure, home ownership and interest by foreign companies who have been waiting to invest into India.
Apart from an increase in national pride, this can result in significantly reduced loss of valuable talent to other countries, meaning a sustained growth in home sales within the country. The increased attractiveness of real estate as an investment class will also result in a major revival of the second homes market.