As we
have just stepped into the month of the Budget Session 2016-17, which is to
commence from 23rd February, 2016; all eyes and ears will be fixed upon our
Honourable Finance Minister Mr. Arun Jaitley for what he has in store for the
nation’s citizens. Real estate sector in particular is most eagerly waiting for
the Budget announcements as it holds the key to this sector’s unprecedented
growth. Apart from the regular demands of Industry Status, Single window
clearance, RERA, Land Acquisition and GST; this sector is relying heavily upon
the announcements of ‘Seventh Pay Commission’ and ‘One Rank, One Pension’, as
it is sure to provide a massive push to country’s residential real estate and gradually,
commercial segment as well, in the upcoming few years.
“Announcements for OROP and seventh pay commission
will act as a fuel to propel the realty demand specially for the housing
segment in India. It is to be noted that over 2 crore people account to
government service and around 32 lakh people towards OROP. This segment of our
population will cater to the demand for second homes, holiday homes and too some
effect, affordable housing as well. This news is thus significant from the realty
sector’s perspective as well, as it will open the gates for the players to
provide this demand with multiple options of providing homes”, shares Mr. Ashok
Gupta, CMD, Ajnara India Ltd.
7th Pay to Cloud 7
There exists a direct relation between housing
demand and one’s purchasing power. If the Union Budget this year announces the
seventh pay commission, there will be an increment in the existing salaries
along with distribution of arrears, according to the time served. Once the
increased salary effect takes place, the pension, post-retirement will become
higher as well. Moreover, the already retired will also receive the benefits of
the seventh pay commission to some extent, and this entire scenario will push
the housing demand forward. “A huge chunk of the buyer group today comprises of
government employees and with their pays expected to go up by as much as
23.55%, we are sure to see a spike in the people ready to invest across the
sector. The need is always there because most of them have been using
government accommodations as their residences throughout their period of
service but once retired, they would be required to vacate the same thereby
fuelling the future demand of housing in the sector”, avers Mr. Rupesh Gupta,
Director, JM Housing.
Adding further and putting light upon how second
home buying option will become prominent post this effect, Mr. Kushagr Ansal,
Director, Ansal Housing states “Overall, there are around 2 crore government
employees who would directly be receiving the benefits of this proposed pay hike.
It can well help estimate the number of families which will be ready with a
bulged pocket. This coupled with the positive steps taken up by RBI last year
is sure going provide much needed consumer influx for the sector, as their
prime motive is end use of property which might even give them an investment
option through second property buying because of increased income.”
OROP effect
It is been projected that the potential
beneficiaries from OROP is about 26 lakh ex-servicemen and 6 lakh widows, which
includes war widows, as well. Therefore, there is a combined total of 32 lakh,
of whom about 86 percent are widows, NCOs, JCOs, and other ranks, about 14
percent are officers. Out of the estimated outlay on OROP of Rs. 8400 crore,
about Rs. 6200 crore will be on account of widows, NCOs, JCOs, and other ranks,
and about Rs. 2200 crore for officers. Speaking on a macro level, we are
catering to another set of demand which is 32 lakh in number. “In a sector
where the demand for housing is taking a toll, every single potential customer
is extremely important. If the upcoming budget gives a go ahead to OROP, we
will have a huge pool of potential customers ready to buy or invest. There
might then be a rise in demand for affordable homes and second homes or even holiday
homes as post retirement or for pensioners, the time after retirement is
perfect to live the desires planned during the service days”, says Mr. Sushant
Muttreja, CMD, Cosmic Group.
Putting more weight on the same, Mr. Rajesh Goyal,
Vice President CREDAI-Western U.P. & MD, RG Group explains “We are looking
at a segment where 32 lakh citizens deserve a wonderful life for the efforts
that they had put in order to take our country to another level. Most of the
retired or old aged people in India are without a roof due to unaffordability
reasons. This causes them to drift towards old age homes, where still there
aren’t enough facilities available for them. Thus, if OROP gets through this
budget session, a fresh demand will be there for the realty players to cater
to, that will open a wide variety of doors. Affordable housing and projects
based on themes for old aged people will become available in abundance.”
With the seventh pay commission, purchasing power of
the existing government officials will increase and at the same time, it will
attract more and more youth towards the public sector. OROP will greatly
strengthen the faith of the pensioners towards the government and will also
allow private players to cater to a much broader but a niche audience. “If the
Seventh Pay Commission and OROP gets a green signal in this Budget Session, we
are talking about almost 2.5 crore potential customers. It is just a matter of
analysing their demands and providing the correct supply. This coupled with 2
crore housing shortage, answered through Housing For All, and with Smart India
Mission already underway, housing sector in India will witness a boom in the
upcoming few years, which will gradually make the commercial segment also grow.
Thus, this Budget Session will be a make or break event for the real estate
sector in particular”, concludes Mr. Vikas Khurana, Co-Founder, HomzCart.
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