Election impact may pull back Mumbai realty till results
Maharashtra and Haryana, the two states which went for legislative Assembly elections on October 15, have another thing in common. They are among the most prominent property markets and together are estimated to constitute 30-40 per cent of the pan-India real estate universe.
While the polls might not substantially impact the property prices in the state, these could slow down policy clearances and infrastructure projects critical to real estate, say analysts. Since the elections happened just about a week ahead of Diwali, a time for the biggest real estate launches, those tracking the sector say there could be some changes and delays in new projects.
A short-term impact on real estate activity and approval processes is likely because of these elections, says Anshuman Magazine, chairman, CBRE, a global consultancy in the sector. “It is usual for project approvals to come to a standstill before elections.” he said and added that infrastructure projects in the states could also be hit, affecting real estate. A Cushman and Wakefield study put the total estimated unit launches at 172,500 across major eight cities of India in 2013. As for prime residential, Mumbai made for 17600 new apartment units in the first half of 2014 and Pune 5,000, according to CBRE data.
The study also shows Mumbai is one of the biggest chunks, constituted 2.2 million sq ft of new prime grade-A commercial supply in the first half of 2014 of a total of 14 mn sq ft across this segment in India. So, in grade-A commercial space itself, Mumbai is the primary real estate driver in Maharashtra and together with Haryana forms more than a third of the pan-India new supply.
Real estate players are a bit cautious and do not want to dampen the Diwali spirits. Lalit Jain, chairman of the Confederation of Real Estate Developers’ Association of India, told a newspaper: “In Maharashtra, the political system has no role to play on project approvals.” Niranjan Hiranandani, managing director, Hiranandani Constructions, said there would not be any perceptible change due to elections before Diwali. However, people would look forward to new policies in housing and incentives for affordable housing. Those policies would depend upon the result of the elections and who forms the new government. Many issues in real estate are governed by state laws. The actual loss to real estate caused by policy uncertainties will be clear after the poll result and how quickly the new government is able to take charge, an analyst said. “The silver lining in all this is that the real estate market is already slow, limiting the impact of elections,” he added.
