How to pull the Real Estate sector back on tracks?
With the real estate sector in a slump, the question in the people’s mind is when the fate and performance of this sector will improve. There is no doubt that the country needs sustainable economic and employment growth and jolting the real estate sector will serve both the needs.
Recent moves of the government to infuse capital in the realty sector is timely but not adequate in terms of size. There are smaller firms which are not backed up by effective measures. In order to have a positive spillover effect on the economy, there is a need to create solutions which intertwine RERA, IBC, banking and financial sector. Creating a real estate ecosystem includes recapitalizing stuck projects, creating development capacity and correcting the wrongdoings of the past can stabilize the current economic conditions.
The measures have to be a combination of infusing capital, resolving the issues regarding unproductive assets and increasing incentives for regulatory framework. The policymakers need to take decisions which impact the current financial situations while keeping in mind the futuristic goals. Real estate sector suffer from delayed projects, shortage of funds and the growing numbers of stalled projects. The entire system of the real estate is overleveraged, the falling of the prices has softened the market. Due to this, homebuyer’s loan values have become higher than the present value, lowering the capacity of personal consumption.
Before providing solutions to revitalize the real estate sector, it is important to understand the crisis phase which started in 2017, the rapid changes brought by demonetization, RERA and GST slowed down the customer inflows and lack of liquidity for the developers. Solutions to bring the real estate out of the slump includes a regulatory framework, where new financing plan can be aligned with creditors and customers. Affordable housing policies by the government, will lower the current prices and pop up the developers’ growth. It is clear that the generation of fresh capital is essential to complete the stalled real estate projects.