Punjab’s real estate sector is expected to witness sluggish growth for some time owing to the assembly elections scheduled to take place during next month. Investors in the realty market are expected to wait for the election results before finalising on any kind of investment.
Real estate experts feel that the new and upcoming projects will be worst hit. Even projects waiting for statutory approval from various government authorities are also going to be affected as investors and financers would be reluctant to infuse money into these projects in the wake of the Code of Conduct coming into force.
The realty sector has already been reeling under pressure from various quarters. The ever increasing interest rates coupled with a slackening demand for property has curtailed the growth of the industry. Now with the Election Commission declaring January 30, 2012 as the date for elections for the 117 member State Assembly in Punjab, the scenario is expected to worsen further.
Confederation of Real Estate Developers' Associations of India’s (Punjab) president Kulwant Singh feels that investors do tend to become sceptic and even sometimes reluctant in investing in new projects during elections as they wait for the constitution of the new government. It has often been seen that with the formation of a new government, policies for the real estate sector also change.
However, Mr Singh added that the elections will have no impact on ongoing projects.
It can be mentioned here that Punjab is considered to be one of the most happening states in terms of growth in the real estate sector. Property prices witnessed major boost even during the year 2010. However, consecutive rate hikes by the RBI has affected the lending rates of banks, both public and private.
Elections in the state are going to further deteriorate the current situation. The country's leading real estate developer, DLF, feels that the real estate industry faced a "little bit" of a slowdown during elections.
DLF India’s executive director (North) Rahul Mehta says that there could be an impact. He added that generally people tend to become a little wary of investing in the real estate market during elections. They have specific liking for stability before making any kind of investment.
Another alarming statistic shows that financial institutions have witnessed up to 20% drop in credit offtake by real estate developers, especially in areas like Chandigarh, Mohali and Panchkula, over the last 4 months.
While speaking to the media, HDFC joint general manager (Punjab, Haryana, Himachal Pradesh) PC Srivastava said that investors are adopting the wait-and-watch policy before taking any decisions on real estate investment.
Non-Resident Indians (NRIs), who are considered to be amongst the key players in the real estate sector, also tend to stay away from the property market till the next government settles in. NRI Sabha (Punjab) president Kamaljit Hayer is of the opinion that NRIs will be desisted from buying any property in Punjab until the new government is formed.
However, real estate experts sound optimistic. They have vowed to support the property market in the state irrespective of the party that comes to power.