The run-up to the 2014 elections had investors betting on real estate stocks that had been hammered due to high interest rate and economic slowdown.

From around 1,200 in early February 2014, the S&P BSE Realty index zoomed nearly 90 per cent to cross 2,200 in early June 2014, just after the elections. The rally however fizzled out, post-Budget, in July 2014. The index is now nearly 30 per cent off its peak, at 1,500. The pre-election rally was certainly not based on ground realities and the sector continues to face headwinds. The property market, especially in regions such as the NCR, faces large inventory and tepid demand. Slowing sales have led to cash-flow issues, fewer launches and stagnant sales prices, hurting margins.

While these cyclical factors may take time to sort out, there were many positive developments on the policy front. REIT regulations could give a boost to the commercial property market. While no new REITs have been launched yet, debt-laden, developers such as DLF, which hold commercial property now have another way to monetise their assets.

Easing of rules related to FDI in property projects could further help the fund-starved sector. The new rules do not have the compulsory three-year lock-in rule for investment and allow FDI in smaller projects. The amendments to the Land Acquisition Act could benefit the large township project developments.

The Real Estate Regulatory Bill, which would give more powers to home buyers, is however, still pending. Progress on this front could aid buyer sentiment. Also, the push to affordable housing could help State-run property developer NBCC and Mahindra Lifespace Developers.

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