Pay panel pumps up realty hopes

As the news of green signal to the 7th Pay Commission created ripples all over the country earlier this week, the real estate sector, too, saw some mood lifting in anticipation of better times ahead. The decision which is slated to benefit over one crore government employees and pensioners will be good news for builders saddled with inventory overhang as more money in the hands of people would mean more potential buyers finalising home deals.  The hike in housing loan allowance from Rs 7.5 lakh to Rs 25 lakh and 138.7  per cent increase in HRA are some of the factors that will have a direct effect on the  housing sales. “With larger disposable income, we expect to see an increase uptick in consumption patterns. The increased cash flow could also help bring back interest in investing in the residential real estate market, especially in the affordable to mid-end housing segments,” says Anshuman Magazine, Chairman & MD, CBRE South Asia Pvt. Ltd. 

“The decision is likely to have a positive impact on the demand side of residential real estate, as it would boost sentiment for home ownership among a set of buyers who have traditionally been very conservative in matters pertaining to large financial commitments," said JLL India’s CEO (Residential Services) Ashwinder Raj.

Developers’ bodies, too, have welcomed the move that will result in real estate revival in the country soon. Amit Modi, Director, ABA Corp and Vice-President, CREDAI, Western UP, called this an important milestone in the real-estate cycle. “While, on the supply side, the country's real estate sector is likely to be supported by recent easing of foreign direct investment (FDI) norms by the government, the implementation of the pay panel proposals will play a crucial role on the demand side”, he said.

Vineet Relia, Managing Director, SARE Homes said, “We as developers hail the government’s decision and the intent of the pay commission that would also help us to synergize with the growth of real estate and economic prosperity of the nation, coupled with boosting the investors sentiment to  new heights.”

"The 7th Pay Commission implementation will be a positive move and raise the affordability of the government employees by increasing their home loan eligibility," said Ankur Dhawan, Chief Business Officer, PropTiger.

"The developers would come up with schemes to make it attractive for public sector employees to invest in realty sector after this approval." According to Dhawan, cities like Pune and suburban areas like Navi Mumbai and Noida will attract a large chunk of public sector employees -- who are looking for affordable houses.

According to industry mavens the demand for affordable housing is going to get a substantial boost as most of the beneficiaries would be looking for houses in this category. Leading industry body Associated Chambers of Commerce and Industry of India (Assocham) said that this move and a normal monsoon should propel consumption in the realty sector.

"A boost of Rs 1 lakh crore to the economy at a time when the global head winds are blowing right in our face would surely be a confidence building measure," said D.S. Rawat, Secretary General of Assocham.

"If the monsoon plays out as per the forecast, the increase in both urban and rural consumption should be a great help to sectors like housing.

The positive effect was also seen on realty sector’s stock on the equity markets after the announcement. Stocks of Unitech, Housing Development and Infrastructure Limited (HDIL)  and DLF rose in the last week. — TNS