Impact of the May 2009 Elec­tions on Indian Real estate Industry

Often, I am asked about the Delhi mas­ter plan 2021, its con­nota­tions, fine print etc. In the last few weeks, most ques­tions seemed to be centred around the “Indian Elec­tions and the impact on the Real estate, espe­cially on the Delhi mas­ter plan”.

Instead of put­ting together a struc­tured flow chart type of a report, I thought I could share some of the inputs in a more con­ver­sa­tional man­ner. (Not to men­tion that our research divi­sion also has the reas­ons doc­u­mented in a very sci­entific man­ner. Insti­tu­tional investors, large investors etc. can surely sub­scribe to it by send­ing a mail to us).

After many years, we have an extremely con­du­cive and favour­able eco-system for the real estate in Delhi NCR. The draft mas­ter plans for Delhi mas­ter plan 2021 are under review. The same should get approved in the next 6 – 9 months (if not earlier), for the fol­low­ing reasons:

Polit­ical Eco-system: Delhi state is gov­erned by the Con­gress. The cent­ral gov­ern­ment also is led by the Con­gress party.  The con­gress has won 7/7 MP seats in these elec­tions. Most stake­hold­ers within gov­ernance have an interest to see through the same, and roll out the mas­ter plan.

The Polit­ical will and play­ers: The last one week has dis­played spe­cific Intent and pur­pose from the stake­hold­ers in the gov­ern­ment to hasten the pace of devel­op­ment within India.  If one looks at the cab­inet form­a­tion and min­is­ters in charge of the growth in the next 5 years, it indeed is a cause for rejoice.  Mr. Jaipal Reddy, in his second term as the urban devel­op­ment min­is­ter would provide con­tinu­ity and pace. Most other min­is­ters who would have a say on the Delhi mas­ter plan also are in key port­fo­lios, and intend to hasten development.

Demand: The demand short­fall / Demand pro­jec­tion for Delhi state, till the year 2021 is estim­ated as follows:

Res­id­en­tial                   1 mil­lion Units

Com­mer­cial                  38 mil­lion sq. ft

Ware­hous­ing*              16 mil­lion sq.ft

*Includes whole­sale markets

The recent DDA allot­ment of approx. 5500 apart­ment saw a response from more than 1.2 mil­lion investors and home-seekers. Isn’t that proof enough of the cap­tive demand for hous­ing in Delhi?

Admin­is­tra­tion: Delhi has many civic agen­cies like DDA, MCD, Delhi Police etc. which do cur­rently have a dot­ted line report­ing to the gov­ern­ment. Hope­fully things would change and a more account­able sys­tem is likely to be put in place. Pos­it­ive noises and actions are already vis­ible since the last few days.

PPP - The whole essence of the Delhi mas­ter plan is on the Public-Private-Participation model, and we would see tre­mend­ous amounts of private cap­ital being infused into the devel­op­ment of Delhi. Let us also not ignore the fact that mul­tiple agen­cies like the Cent­ral govt, State govt, private enter­prise, World bank and other aid­ing agen­cies, indi­vidual investors etc.would be invest­ing into the infra­struc­ture and other growth in Delhi.

Events — Com­mon­wealth games, the bid for other games by 2020 etc. would bring in infra­struc­ture invest­ments into Delhi in the short & mid term. Besides, Delhi would always play host the vis­it­ing state heads, dig­nit­ar­ies, sem­inars, con­ven­tions etc. wherein the who is who of the global policy heads would be participants.

There are a deluge of reas­ons why one must invest into Delhi, includ­ing reas­ons for shift­ing invest­ments from the NCR area into Delhi.

As an organ­iz­a­tion, we have inves­ted more than 5 years into the Delhi mas­ter plan, and can be help­ful for other members/readers of this con­tent. I can be con­nec­ted with on menon@certesrealty.com

Our research find­ings (only a min­is­cule por­tion of the same) are already pos­ted on www.delhi-masterplan.com

This entry was posted on Wednesday, June 10th, 2009 at 10:51 am and is filed under Land. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.