There is a sense of hope among developers for a positive post-poll scenario. Will things start looking up for the sector after the general elections? Will clarity on the new government lead to businesses investing? So far, none of the campaigns have outlined a comprehensive proposal for recovery of the real estate market - specifically in terms of providing more housing and managing interest rates.

Cash Crunch Ahead Of Elections

In India, the property market is a key election financier, and considerable amounts of unaccounted money are being pumped out from the real estate sector to fund the elections. Before the polls, developers are expected to provide liquidity to politicians so as to finance their campaigns. Many developers who are funding possible candidates are delaying their projects due to the lack of liquidity.

The timing is certainly bad. Reduced housing absorption has already adversely impacted developers' liquidity and in turn, developers' funding ability. Political commentators also note that certain properties are sold below market rates in order to generate cash for the election campaigns. Given this situation, many developers cut down on new launches and focus solely on selling the existing inventory.

Realty After Elections

With just a few weeks to go before the world's largest democracy chooses its new government, fence-sitting investors and homebuyers will remain spectators for that period and make their moves. Many assume that property prices will shoot up post elections, but this expectation in unfounded - there are too many factors at play, regardless of which party wins. Election results do not make or break a market, but they do affect market sentiments to a significant degree.

  Over the last few quarters, political uncertainty has significantly weakened buyer confidence in many regions. A decisive win for any of the alliances will uplift homebuyer sentiment and the property market will see a return of buyer demand due to the reinstatement of confidence. Post elections, if the road to recovery is unhindered, property buyers may very well re-enter the market in good numbers.

Great Expectations

Political uncertainty certainly has a tangible effect on the Indian real estate market, and it is not easy to separate political uncertainty from broader economic factors such as job creation and interest rates. A better vision on infrastructure will help make the market more buoyant. New infrastructure initiatives have a tendency to boost pricing of residential property in the immediate vicinity.

The manifesto of one of the parties in the electoral fray mentions several initiatives in the infrastructure space, with an intended spend and spending $1 trillion on upgrading India's infrastructure over the next decade.

It also commits to significant expansion of and improvement in the Indian Railway network, including covering a million plus cities by high-speed rail. The manifesto also mentions upgrading the infrastructure of the port sector, developing inland waterways to strengthen infrastructure and encouraging public private partnership for the creation of world-class airports.