With the new government setting its development agenda, can the real estate sector look forward to good days? A look by K. Sukumaran

The President’s address to the joint session of Parliament on June 9 augurs well for the economy. The pronouncements contained therein covered almost all policy planks of the new government. While tackling of inflation and price rise have found top priority, subsequent statements of leaders indicate that tough decisions will be forced on the nation. Increase in production and productivity in all sectors of the economy need to be brought on the fast track. This being so, the real estate sector, which has been a major contributor to the GDP to the extent of 10 per cent, will be a torch-bearer. The key areas for the real estate sector as enunciated in the President’s address are:

Development of 100 cities

Massive infrastructure

Roads and highways

High speed rail

Waterways along the coastline

Let us look into some of the above segments from the angle of opportunities for expansion, employment generation, asset build-up and increased contribution to GDP.

Infrastructure

In an era of urbanisation and congestion in our major cities, if new cities are to be developed where the quality of life need to be of international standards, the basic requirements are world class roads / transport, power, housing, educational institutions, entertainment facilities, health & medical facilities etc. A visionary approach to developing these facilities will provide large-scale construction, supported by supplies of cement, steel, and other construction materials at reasonable cost. Reduction in prices of such raw materials need to be achieved either by lowering the cost of production or cutting down overheads and relief in duties, levies and taxes. Encouragement for modern technological application is going to be another crucial factor.

New cities

A new city means building all infrastructure — roads, railways, houses, transport, communication, health and sanitation, apart from increase in trade / exports. ‘Rurban development’ is the catch word of the new government. The plan is aimed at providing urban amenities to rural areas. The 100 centres for development under this programme are yet to be identified on the basis of specific parameters. This may include building new cities and upgrading of tier-2 and tier-3 cities. Infrastructure development will be critical for the success of this programme. Developing already congested cities is another option. Acquisition of land in any case will be a primary necessity.

Roads, rail and waterways

The Indian railway system, the largest in the world, will need to be modernised with high speed trains connecting major metros by building the proposed ‘diamond quadrilateral’ network within a time frame. Agro-rail freight corridors for transporting perishable agricultural products could help the farming community to get a better price and at the same time reduce the cost to the ultimate consumer. Extension of national highways and development of small airports at low cost, and development of minor ports along the long coastline can improve rail-land-water links. As reported, development of roads leading to our borders will itself generate a lot of construction work.

Building new cities alone will be a huge task. Development of roads, national highways, rail and air services will mean great scope for the real estate sector. Industries can generate ancillary/service activities. Migration of people will generate demand for housing. In short, real estate-based activities can be broadly grouped under:

Land development

Construction

Cement/steel plants

Power generation

On the whole, a real estate revolution.