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India's 2024 general election which is being held over six weeks between 19 April and 1 June - is the biggest the world has ever seen. The multi stage election is being held across the country from 19 April to 1 June 2024 in seven phases. The results will be declared on 4 June 2024.
It is said that stock market is the biggest indicator of the election outcomes or at least the direction the wind is blowing as it is close to the political corridors. The real estate in contrast gets buoyed by the sentiments of the people. So which way is the real estate inclining this year. Are we going to see a sales peak or a dramatic downturn.
HISTORICAL ELECTION TIME TRENDS
Historically speaking the election times have been a period of slowdown for real estate as the people and the sector players get in wait and watch mode, for the changes to the existing policies. This is reflected in the lower transaction volumes and property price drop during pre-election period. For example, the real estate market of top seven cities saw almost 20% - 30% drop in home sales during the 2014 general elec- tions and similar notable decline in sales and new launches during the pre-run to 2019 general elections.
During the past election years, there had been a general trend of the potential buyers to wait and find out which way the election swings. If an unstable government comes, they prefer to hold on to their cash and wait to make informed decisions in the period of political stability. Post elections, all industries including real estate usually witnesses a revival, given the clearer picture of what lies ahead. The rebound is driven by clarity on new government’s policies and initiatives for the sector as well the uptick in the customer confidence. The post-election times of 2014 and 2019 are a testament to these inclinations with almost 50% increase in sales in the following months, as a result of positive consumer sentiment and increased investments.
The real estate recovery in the 2019 post-election period was particularly significant with the full throttle implementation of RERA which drove the market momentum and surge in new investments in the residential and commercial real estate.
GENERAL ELECTIONS 2024 CURRENT SCENARIO
This year’s general election is the largest-ever election in history, surpassing the previous elections, with approximately 970 million voting. These elections are being seen as people’s referendum on present government’s economic record and Hindutva rhetoric or their desire for change.
In some ways, this year’s general elections draw a parallel with historical 1989 period when Janta Dal led government in the center acknowledged their challenging po- sition in the state elections. Likewise, despite current dominance of the ruling party, much of the political outcomes will be contingent on the diverse and dynamic electorate.
IMPACT OF PRESENT ELECTIONS ON REAL ESTATE?
The far-reaching implications of these elections results on the economic stability, policies, investor sentiments and international relations cannot be emphasized enough. These elections my just prove to be a seismic shift in terms of new agendas and priorities, irrespective of the political party coming to power.
While elections do introduce short-term volatility, the real estate till now has remained resilient showing no major fluctuations. But, any major change in domestic or internation policies, post-election will have a direct impact on the real estate segment. Industry experts, investors and developers are keeping a cautious approach. The hope is for a stable government and sustained economic momentum, that will boost the real estate growth in long term.
THE OPTIMISTIC OUTLOOK
Irrespective of the government in power, the key driver for optimism for real estate is the IMF projection of strong GDP growth for India in the coming years. This will bring in favorable economic eco-system for real estate investments. The confidence in India’s continued growth comes from its strong economic fundaments, educated population prowess and the weakening of global manufacturing hubs, thereby favoring Indian set-up by world manufacturing giants.
Regardless of the fluctuations in real estate sales and investments in past decade and especially during the pandemic, the resilient trends and even a spike of growth in certain segments highlight the inherent strength and adaptability of the sector, garnering a vote of confidence from investors.
Infrastructure segment is antic- ipated to see robust growth under any government and with growing environmental awareness and global mandates, sectors such as electric vehicle (EV) renewable energy and recycling will continue to get attention from the elected government.
The other reasons for optimism are, real estate regulatory reforms and norms that have ensured exit of scrupulous developers, consolidation of the sector. Only organized players remain, that has given a professional hue to the sector. In addition, the growing housing demand across segments has ensured a ready market for the developers and in fact, record number of land deals were closed last year across the country.
THE PEOPLE SKEPTICISM
Many states going into elections this year are contemplating a 5-10% increase in ready reckoner (RR) rates for properties in the upcoming financial year. The decision, expected post-elections, will hamper the customer sentiments. Also, political parties utilizing real estate funds for campaigns is contributing to the liquidity crunch in the sector.due to the, cautious investment de- cisions by businesses. For the construction sector, as per India Ratings and Research (Ind-Ra), due to the general elections, the tendering activity could slow down. Despite the continued focus on capex by the central government and likely rebound in state and private spending, the EPC sector’s pace of order execution will moderate, given the elections, it reported.
The frustration of homebuyers with present regulatory scenario and city conditions too have come to the forefront during these elections. For example, unhappy over the issue of pending registries, homebuyers in Noida and Greater Noida launched a “No Registry, No Vote” campaign ahead of the 2024 Lok Sabha elections. They said that either they will not exercise their franchise or choose NOTA in the upcoming Lok Sabha polls, if registries of their flats are not done. A similar example is of Bengaluru residents who have decided not to vote in the Lok Sabha elections, as they face a critical water short- age situation. While, such actions do not ensure a solution, they are indicative of the people’s underlying dissatisfaction with the system that includes, government bodies as well as the real estate, developers and urban planners.
The 2024-25 interim budget by the present government had made many a promises for reforms in the real estate and had envisaged increasing tax benefits for home- buyers, reducing GST rates and simplifying taxation. The release of government land for affordable housing was also recommended. How much of that will be implemented in reality, we will have to wait and watch.
But one thing is for sure, the real estate industry that includes investors, developers, and homeowners has far-reaching implications on employment, infrastructure, and economic progress of the country and will be the focus of the new government.
THE BIG QUESTION: HOUSING FOR ALL
The Lok Sabha elections are going in a full swing, with political parties engaging in a war of words, manifestoes and promises to win over voters. Housing is one of the critical issues that is time and again being used as a pitch by the politi- cians in their election rallies.
The ground reality is that affordable housing sales share has fallen down to 20% from 37% in last five years. “Even as the nation awaits the results of the ongoing general elections, any affordable housing revival will hinge on further government sops and incentives for buyers and developers, said Anuj Puri, Chairman - ANAROCK Group. Further quoting government figures, the government has addressed a mere 25.15 % of the housing short- age so far, which is far less than the touted 67%. Around 83% of the houses to be constructed under PMAY-U are not meant for the urban landless poor, but rather for families already having access to capital and land. The slum rehabilitation scheme within PMAY-U has sanctioned only
2.96 lakh homes. The completion rates also differ from State to State, with northeastern states seeing the lowest numbers and Bihar, Andhra Pradesh, Manipur, Mizoram, Meghalaya, Sikkim, Andaman and Nicobar, and Jammu and Kashmir achieving less than 50% of the target.
The interim budget promised to bring in a new housing scheme for the middle class to buy or build homes, especially those living in rented houses, or slums, or chawls and unauthorized colonies. In current election manifestos, all the parties from ruling, to opposition to regional have promised housing schemes. But much will depend on the poll results and how the tug of war between the center and the state government unravels. At present many a welfare housing schemes of states, from Telangana to West Bengal and Andhra Pradesh have been put on temporary hold by the Centre.
IS IT A GOOD TIME TO BUY A HOME
If we are to believe the experts, election period is the right time to buy property. All political parties make infrastructure development a prominent feature of their election manifesto. With enhanced connec- tivity and improved urban infrastructure announcements that will get implemented over a next few years’ post-election making attractively priced tier 2 or 3 city or metro suburbs property a good buy for potential buyers looking for appreciation. In addition, post-elections economic rebound, results in price growth of the properties.
It is also seen, that In the run-upto elections, governments ease credit conditions and banks and financial institutions come out with special offers and schemes that gives home buyers increased financing options, to buy home or invest in a property. The developers too, announce at- tractive discounts and incentives, that can give a homebuyer the opportunity. To avail best deal before the post-election price hike.
Looking ahead to the current election year of 2024, industry experts foresee another peak in housing sales and new launches.If we are to believe the experts, election period is the right time to buy property. All political parties housing sales and new launches stating that all factors currently favor a strong performance in the residential market. Undeniably, low-cost housing issue looms large in this election and there are strong indications that the large part of new government’s focus will be on making housing more affordable for low ticket size buyers and offering tax benefits and incentives to the mid-income hous- ing buyers.
The old wisdom says, all times are good times to buy a home, if you have the cash. The ongoing election period irrespective, with rise in construction costs, the properties will continue to get costlier. What probably one can wait for, are some favorable announcements from the elected government for the homebuyers.
POLLS, PEOPLE & POLICIES
As the nation undergoes the 2024 general elections, adherence to democratic principles and vot- ers' ability to reason while voting will shape India's future landscape. These being the, general elections, the focus of all is predominantly on larger issues of national importance. For the voters, though local civic issues too hold importance such as housing, water, electricity and trans- portation, that will sway their vote. For the real estate sector, the anticipation for favorable policies and reforms is palpable. The real estate analysts predict a strong inclination towards another peak in housing sales and launches. But much will depend on the outcome of the elections in June.
In current election, all the parties from ruling, to opposition to regional have promised housing schemes. But much will depend on the poll results and how the tug of war between the center and the state government unravels.
Irrespective of the government in power, the key driver for optimism for real estate is the strong GDP growth projections for India in the coming years, given its strong economic fundaments, educated population prowess and the weakening of global manufacturing hubs, thereby favoring Indian set-up by world manufacturing giants.
The past election years have seen a general trend of the potential buyers to wait and find out which way the election swings. If an unstable government comes, they prefer to hold on to their cash and wait to make informed decisions in the period of political stability. Post elections, all industries including real estate usually witnesses a revival, given the clearer picture of what lies ahead.
