The real estate market in India is projected to cross USD 180 billion by the year 2020 from USD 126 billion in the year 2015. The rise of nuclear families, quick urbanization, increasing household income and the emergence of prime real estate developers such as the Lodha Group and the likes, are the drivers for the progress in all spheres of Indian real estate scenario, including commercial, retail and residential.
With rising the demand for commercial and residential space, the pioneer real estate companies such as the Lodha Developers, are leaving no stone unturned and bringing new projects in each real estate spheres. The construction and real estate sectors are an integral part of the economy’s growth graph and accountable for the development of core infrastructure in the country.
The swift urbanization is asserting the growth of real estate in the country. More than 70% of the country’s GDP would be contributed by urban belts by the year 2020. The private equity investments in real estate reached USD 3.2 billion by September this year and are anticipated to cross USD 4 billion by end of 2017.
The role of Indian Government
The Indian Government has shown encouraging signs towards the real estate sector. In the year 2015, the Indian government approved 100 Smart City Projects across the country. The Union government also raised the FDI (Foreign Direct Investment) limits for settlements and townships development projects to 100%. Real estate projects in the SEZ (Special Economic Zone) are also allowed 100% FDI. In the Budget 2017-18, allocation of USD 3.57 billion (Rs 23,000 crore) was made for PMAY (Pradhan Mantri Awaas Yojana), with the target of completing 10 million houses in the rural areas by the year 2019. The Indian government has also released the draft guidelines for investments by REITs (Real Estate Investment Trusts) in the non-residential segment.
The Tier-I cities in the country moved up to 36th rank in the 2016 bi-annual Global Real Estate Transparency Index released by JLL. The catalysing elements for this were more liberalized FDI regime and progress in structural reforms.
Policies and Initiatives fostering real estate
During 2016, new residential project launches were lower than the units sold. With the states gazing at the impending deadline for implementing RERA (Real Estate Regulation & Development Act), most of them are falling in line. This landmark law would enforce accountability and unprecedented transparency needs for the real estate developers in the system, and lead to an increase in consumer confidence. Consumer activism that has been making news in the recent times, would increase in the distressed ongoing projects. Enhanced transparency would bring higher investments in the real estate markets. And it’s isn’t just RERA which the real estate sector expects with bated breath. The GST (Goods and Services Tax) and the Benami Property Act would also have a key impact on how the real estate developers go about their businesses. The demonetization gave a shiver to the older ways of working, but didn’t affect the self-governing developers. The remaining have understood that it’s the time for revamping their present business models if they wish to stay in the business at all.
Today, the residential property market is ruled by the end-users – speculative investors are just making a beeline as an investment category. The demand for residential projects is projected to pick up towards the end of this year – but the recovery would be sustainable and would be on better market fundamentals than the transient sentiment.
While real estate industry would represent a noteworthy opportunity in case the growth projections proves to be true, it’s not just the industry that would benefit. It is believed that this strong growth in the real estate sector over the subsequent few years would translate into demand for other adjacent industries, such as construction, housing finance companies and banks and consumer items.
Most of the Indian cities have residential launches in luxury as well as budget segments. The Indian housing market has widely varied needs from diverse income groups and real estate developers. By only winning the faith of the investors, the real estate companies can go about doing their business in days to come.