Elearnmarkets - Financial Market Learning
  • Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • English
    • Hindi
    • Bengali
No Result
View All Result
  • Courses
  • Webinars
  • Go To Site
  • Login
Elearnmarkets
  • Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • English
    • Hindi
    • Bengali
No Result
View All Result
Webinars
Elearnmarkets - Learn Stock Market, trading, investing for Free
No Result
View All Result
Home Fundamental Analysis
778_ELM_Blog Image_04

Government Infra thrust to drive Real Estate

Elearnmarkets by Elearnmarkets
November 18, 2020
in Fundamental Analysis
Reading Time: 4 mins read
2
460
VIEWS
Share on FacebookShare on TwitterShare on WhatsApp

The Indian real estate sector went through a roller coaster ride and was struggling with unsold inventory, low buyers’ confidence, delays in projects, and negative cash flows.

However, a number of growth promoting regulatory developments and initiatives announced over the last two years, are helping to revive the sector and is expected to pave the way for strong sector growth in the future.

It contributes heavily to employment generation and GDP of the country. According to a joint report by CREDAI and JLL, India’s real estate sector is projected to reach $180 billion by 2020. It ranks as third major sector to influence GDP.

  • The growth in this sector is augmented by the growth of:
  • The corporate environment leading to a demand for office space
  • Rise in urban and semi- urban accommodations
  • Transition of kuccha to pucca housing, especially in rural areas.
  • The hospitality sector is witnessing a skewed growth and most hotel chains are planning massive expansions.

Real Estate

The four sub-sectors boosting demand

Housing Space

  • GOI aiming “Housing for All by 2022”- robust housing demand and has increased its focus on Pradhan Mantri Awaas Yojana,especially in rural areas
  • Rise in transition of kuccha housing to puccka housing in rural areas.
  • Public-Private Partnership policy contributing to address the rise in housing shortage in cities at affordable rates.
  • Growth in population and rapid urbanization.
  • Rise in disposable income.
  • Easy availability of finance.
  • Developers are focusing more on affordable and mid range categories to meet the huge demand.

Retail Space

  • Rise in demand due to foray of FDI in multi brand retail.
  • Growth of consumerism in India.
  • Organized retail sector is growing by 25-30% annually.
  • The retail segment is expected to remain steady in the medium to long term backed by strong supply pipeline and growth in absorption rate.

Hospitality Space

  • Indian and International hotel chains are expanding. Expansion is expected to boost the sector.
  • Service apartments along with hotel rooms, business parks and even retail arcade are rising under make in India programme.
  • Tax incentives for hotels and higher Floor Space Index (FSI) are helping in the growth of the hospitality space.
  • Government’s efforts to promote tourism especially in Tier2 and Tier3 cities are generating a strong demand for hotels, especially budget hotels.

Commercial Space

  • India’s commercial space is one of the most well-organized markets in the Asia-Pacific region, with the introduction of Real Estate Investment Trust (REITs) structure it will become more efficient.
  • Few large players with pan India presence dominate the market.
  • Change in operating model – shift from sales to lease and maintenance
  • Rapid growth in service sector driving demand.
  • Increase in demand for commercial space due to robust business growth and optimism in Indian economy, especially in tier-II cities.
  • It is the most preferred asset classes in real estate by the investors over the last few years and has attracted about 80% of the total investment made in the sector.

Government Initiatives

The government has implemented several policies to support the sector. The government has also relaxed FDI norms which may translate into more funds inflow. Real estate is the fourth largest sector in terms of FDI inflows and this fiscal the sector witnessed strong inflows. Government support and implementation of various policies lead to transparency and boosted confidence, especially of foreign investors.The Government of India along with various state governments have taken regulatory reforms and initiatives that were aimed at driving transparency, governance and financial discipline required to boost and support the development of the real estate sector. Few of such policies and initiatives are:

Realty

Source: www. IBEF.Org

Policies:

  • Real Estate (Regulation and Development) Act, 2016
  • Benami Transactions Act
  • 100% deduction in profits for affordable housing construction
  • Interest subsidy for first-time home buyers
  • Change in arbitration norms for construction companies
  • Approval of Real Estate Investment Trust(REIT)platform by SEBI.
  • PPP(Public-Private Partnership) Scheme
  • Credit Link Subsidy Scheme (CLSS) on home loans under PMAY
  • Approval of 100% FDI via automatic route.
  • Introduction of GST

Initiatives:

  • Pradhan Mantri Awas Yojana- “Housing for All” with its two components:Pradhan Mantri Awas Yojana (PMAY) Urban and Pradhan Mantri Awas Yojana (PMAY) Grameen
  • National Urban Housing Fund
  • Smart Cities Mission

Bottlenecks

However, the government is required to reform few more policies for better functioning of the real estate sector.

  • One being the high transaction cost which needs to be brought down.
  • GST of 12% along with stamp duty of 6-7% is very high and consequently is pulling down the sector demand.
  • Developer has to comply by Reverse Charge Mechanism(RCM) in GST.Under this a person who is registered under the GST will have to pay GST on all the services and goods that are availed from a person who is not registered under GST.
  • The dual tax effect has increased the cost and has adversely affected the developers, especially the smaller ones.

Stocks to benefit are:

infra

Bottomline

  • The implementation of regulations and reforms boosted the sector, especially the residential realty.
  • In affordable housing scheme, the government provides GST subsidy to EWS, LIG and MIG under CLSS at a concessional rate of 8%.
  • The reforms like RERA and Benami Transaction Act improved transparency and answerability.
  • It has also brought back consumer confidence and a platform where developers abiding with corporate governance and transparency will continue while non-serious and small players will not survive.
Tags: companiesenglishgovernment policiesreal estateSectorsector analysis
ShareTweetSend
Subscribe To Updates On Telegram Subscribe To Updates On Telegram Subscribe To Updates On Telegram
Previous Post

How to Trade Opening Range Breakouts

Next Post

Investing with Rs. 500: Learn the top 5 ways of doing it

Elearnmarkets

Elearnmarkets

Elearnmarkets (ELM) is a complete financial market portal where the market experts have taken the onus to spread financial education. ELM constantly experiments with new education methodologies and technologies to make financial education effective, affordable and accessible to all. You can connect with us on Twitter @elearnmarkets.

Related Posts

penny stocks
Basic Finance

3 Important Factors to Consider when picking the right Penny Stocks for Investing

June 14, 2022
6.4k
quarterly results
Fundamental Analysis

9 Important Things to Consider in Quarterly Results Before Investing in Stocks

June 21, 2022
5.8k
cash flow analysis
Fundamental Analysis

5 Ratios for Cash Flow Analysis

June 21, 2022
6.6k
turnover ratio
Fundamental Analysis

6 Turnover ratios for Checking the Company’s Efficiency in Generating Sales

June 21, 2022
3k

Comments 2

  1. hemp hair mask says:
    2 years ago

    Hi, i feel that i saw you visited my web site thus i got here to go back the
    prefer?.I’m attempting to to find things to enhance my site!I suppose its good
    enough to use a few of your concepts!!

    Reply
  2. forex scalping software says:
    2 years ago

    Its like you read my mind! You appear to know a
    lot about this, like you wrote the book in it or something.
    I think that you can do with a few pics to drive the message home a little bit, but other than that, this is great blog.

    An excellent read. I will definitely be back.

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Follow Us

Facebook-f Twitter Instagram Linkedin-in Youtube Telegram

Download App

Register on Elearnmarkets

Continue your financial learning by creating your own account on Elearnmarkets.com

Register Free Account

Get Articles On Email

Enter your email address:

Categories

  • Basic Finance
  • Derivatives
  • Financial Planning
  • Fundamental Analysis
  • Technical Analysis
  • Marketshala
  • Miscellaneous

© 2022 Elearnmarkets . All Rights Reserved

  • Visit Elearnmarkets
  • Courses
  • Webinars
  • Financial Guides
  • Get Free Counselling

Get Elearnmarkets App

No Result
View All Result
  • Article Categories
    • Basic Finance
    • Derivatives
    • Financial Planning
    • Fundamental Analysis
    • Technical Analysis
    • Marketshala
    • Miscellaneous
  • Language
    • Hindi
    • Bengali
    • English
  • Courses
  • Webinars

© 2020 Elearnmarkets All Rights Reserved

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
ELM School

LOVING OUR BLOGS?

Explore more content for free at ELM School.

Start reading & learning from various text-based modules covering all aspects of finance from today!

VISIT ELM SCHOOL