Realty sector expected to grow by 6.6% in 2020 with fiscal support and government policies

By : 360 Realtors

13 January, 2020

According to reports, the residential and non-residential real estate sector of India is expected to grow by 6.6% in 2020. This is due to the fiscal support and the government’s focus on affordable housing. Certain government policies in support of this sector, along with fiscal aid will lead to the short term expansion of this sector. It has also been stated that increased activity among the retail, building and logistics sectors would play an important role here.

Since 2019, an increasing number of housing projects ended up being stalled due to lack of funding. This was caused by the default of several non-bank financial organizations, which led to a credit crunch, hampering funding for both homebuyers and builders.

However, a portion of these stalled projects is expected to resume construction soon due to funds now being available more readily. The government has announced a package of INR 10,000 crore in November 2019 to as aid to these stalled projects. Other state-run financial institutions will contribute an additional INR 15,000 crore package.

In 2015, Prime Minister Narendra Modi had launched the Pradhan Mantri Awas Yojna with the goal to provide affordable housing to all the urban poor. Over 4,000 towns were picked by the government to implement this initiative, and it plans to reach the goal in 2022. Driven by this initiative, the sector of affordable housing is expected to have great opportunities in the near future. Various other complementary schemes were also launched with the PMAY(U), which provide the buyers with financial aid.

However, though PMAY(U) would boost the housing sector, it may be a challenge for the government to reach its goal by the stipulated timeframe. This is a problem created by India’s fast growing population, which results in a constant rise in the demand for such homes and problems like delays in land acquisition and the construction.

It is expected that constructions under this initiative would continue beyond 2022 and keep contributing to the growth of the sector.

It is to be noted that a large number of unsold units of medium and high end homes in urban areas is likely to limit the potential for the luxury housing sector to grow.