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New Government - What the Indian Real Estate Sector should Expect?

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As India’s new Prime Minister takes his oath, several sectors breathtakingly awaits for some optimism or magic wand to be waved at them. Needless to say, at that the real estate sector is one of them. Just like any other sector, the real estate sector is somewhat nervous and also excited that how their fortunes are going to be shaped by the new government.

Speculations have been raging strongly across all the sectors and developers have been contemplating on entering into liaison with the government either about land acquisition or contracts. Experts opine that an improvement can definitely be expected in the short-term investment options in the real estate segment. Several new regulations for the segment such as Foreign Direct Investment (FDI) in real estate and Real Estate Investment Trusts (REITs) have in doing the rounds for quite some time now. While their use is believed to do well for the sector, the implementation of the same in the true sense of the term still seems like a far-fetched dream. In such a scenario, most investors are happy with the government making minor agreements as long as agenda and functions are clear, clubbed with a strong will power to ensure proper functioning of those agendas. What investors are expecting out of the government is goals that are clearly defined.

Will there be an immediate effect?

Well, the government is made up of people like us, so no one is a magician who would be able to find solutions to all issues at one go. Bringing in reforms and regulations within a government is a gradual process and it definitely demands patience. If the government is stable it can definitely attract foreign currencies. But an immediate turn around must not be expected; any new reform policies will take at least nearly a year to be implemented.

What the real estate sector can currently focus on is examined below:

Real Estate Investment Trusts (REITs)

The introduction and implementation of the Real Estate Investment Trusts (REITs) have been doing the rounds for a long time now. While experts are of the opinion that REITs are bound to revive investors’ interests in the Indian real estate, it will also give a boost to the otherwise somewhat subdued realty market of the subcontinent. REITs will be able to bring in more transparency within the sector as they will have to comply with corporate governance, reporting standards and other kinds of regulations that have been drafted by the Securities and Exchange Board of India (SEBI).

The new government may look at the long-term benefits of REITs for the real estate sector and consider approval of the same.

FDI Policies in the Retail Segment

In light of saving the interests of the Small and Medium Enterprises (SMEs), the new government is quite resistant towards opening its doors to FDI in certain sectors. However, what is optimistic is that, in the long-term, if the country has to open its doors to FDI, there is definitely a need to consider retailers of international standards coming into the Indian hinterland. Since the new government is committed enough to promote FDI in other sectors, it would definitely be working towards making FDI a more investment-friendly option.

So, now for the general public – what should they look for in the newly formed government? As mentioned earlier, that it takes time for any government to bring major changes, so the general public should also wait with some patience and look forward with an optimistic mindset. Both buyers and end users, the pivotal players of the realty market, will have to wait so as to witness a bright future for the Indian real estate sector.

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