Be it the liberalization policy of 1991, which encouraged influx of the Indian branches of multinational companies, or the Asian Financial Crisis (AFC) of the late 1990s, which decreased residential prices considerably. Later, the damage done by the AFC was cured by governmental policies formulated by the NDA coalition. There was an increase in the real estate prices that saved the industry from doom.

But there came a time when the economic slowdown led to lull in the real estate sector as well. The slowdown was so bad that people were afraid to invest money anywhere. Big banks were crashing down and investors were not too keen on putting money anywhere. The lack of investor activity led to deflation. That is one of the reasons that government reduced the rates so that more people could lend money and invest in the country.

One other aspect to this was also black money. This was one of the reasons that the property rates are very high and it is very difficult for an individual from middle class to afford this asset class. This is where government is now focusing to improve the policies.

Governmental policies regarding real estate have often altered the look of the industry in all aspects, commercial projects, infrastructure development, townships or residential projects.

The last decade has witnessed emphasis on infrastructure by the government. This has led to great development in the real estate market with budget projects as well as luxurious villa townships in the National Capital Region like Noida, Gurgaon and Greater Noida. However, there are still some policies, which might degrade the business side of the real estate sector. These policies like Urban Land Ceiling (ULC) Act of 1976, which let government acquire excess land, should be relooked at with consideration to the present day scenario. The Rent Control Act, which did manage to protect tenants from forceful eviction, but never took into account inflation on the leaser’s part should also be revisted.

The most favorable government structure for real estate is one that supports and promotes development. This will raise confidence amongst investors that the government wants to see projects materialize and increase investment in property.


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