Real Estate transformation cannot be missed out when talking about 2016 transformations. It was one of the most affected sectors by the policy reforms by the government. The changes, however, have faced few criticisms, but if we look at them with a long-term perspective, they will be very beneficial. The system will become more disciplined, reliable and legitimate.
Budget 2017-18 has given the importance to the housing sector and this move is taken to make this sector more lucrative for the stakeholders which include the people who impact the supplies. The main suppliers are banks and developers. Since there are many policy changes taking place in the housing sector, the factors which affect the demand of this sector keep changing. However, the consumers never stop investing in Real Estate.
The Two Major Policy Initiatives are –
1. Pradhan Mantri Awas Yojana (PMAY) or Housing for All
2. Smart Cities Mission
These two policies have had important influence on the demand and supply factors of Real Estate. They have also affected the issues revolving around the informal housing. The Real Estate Regulatory Act which came into effect recently does not support the promotion of informal housing but it does make the formal residential market more legitimate.
We are facing a crunch of about 18.8 million homes in the urban areas from which 15 million are necessary in the LIG sector. The “Housing for All,” as the name itself suggests, strives towards providing housing for all by 2022 with the help of decreased interest rates, lenient regulations and various strategies. The “Housing for All” and “Smart Cities Missions” complement each other by utilizing the advantages and also capitalizing on the shortcomings. Smart Cities missions has its full attention on managing the availability of land, improving the facilities of basic infrastructure and execution SPVs (Special Purpose Vehicles). On the other hand, “Housing for All” scheme has its focus on developers and buyers and their incentives.
Some initiatives have been taken under Smart City which include affordable and reasonable housing for economically backward sections, housing for homeless, development of slum areas, rental housing etc. all these initiatives are in confluence with the housing for all.
This is the best time when private developers can get associated with the informal sector for development of housing. There are some factors which will aim at the housing scarcity issue in India through private participation which are –
As technology has helped in almost every field, it will prove to be very beneficial for realty segment as well. It can definitely bridge the gap that is taking place between efficiency, funds and time.
Improvement in infrastructure is the need of the hour which the “Smart Cities Mission” aims to achieve. Necessities like electricity, water drainage, supply of water, sewerage and cleanliness will be fortified.
Land – The Savior
It goes without saying that land has the most major role to play in the availability and pricing of housing sector. Smart Cities plan to handle the available land which is owned by the government to develop the housing in the informal sector. The affordability of the housing units will increase this way because this land will be available at subsidized rates.
Area Based Development (ABD) is a redevelopment model which is being used by most of the smart cities. This model gives a chance to aim at the issues of the informal sector by evolving the area with quality and proper housing because the urban informal housing is in these locations.
More than one Financing Options
The most common problem which is prevailing in the housing sector is the incomplete projects due to lack of funds. If a constant and stable cash flow is maintained, this issue will be resolved. At present, smart cities get their funding from various government schemes.
The Smart Cities Mission is a great way to bring private entities to participate which proves to be very useful as it increases the efficiency of the projects. The system of revenue and funding come under the smart city initiatives, all service providers are benefited under this mission.
The confluence of Smart Cities Mission and Housing For All initiative will prove to be successful only when executed properly. Also, the overall evolution should be done keeping in mind the proper standard of housing and involving private service providers.