Real estate – making India
Policy reforms and a macro-government vision mark the start of a new era in real estate sector. In this report, we outline the role of real estate in the evolution of a new India.
With 31 out of every 100 people in the country living in cities or towns, India has a higher number of people living in urban areas (377 million) than the entire population in the US (around 314 million). It is estimated that this number will increase to 590 million people, who will live in around 60 cities (from 42 currently), by 2030.
India’s real estate market
India’s real estate market is progressing well in its recovery mode and its long-term fundamentals seem promising. The new Government is expected to drive reforms and regulations that are long overdue. This is likely to trigger recovery and fuel growth in the country.
Several factors have contributed to this phenomenon, boosting the confidence of stakeholders:
- Stable Government with plans to relax Foreign Direct Investment (FDI) norms
- Provision for housing for all by 2022
- Creation of 100 smart cities
- Approval of Real Estate Investment Trusts (REITs)
New age funding methods
India’s real estate transaction landscape has seen a surge of investments made by pension funds (PFs) and sovereign wealth funds (SWFs). The potential of and the challenges faced in investing in real estate have led to the evolution of this new form of investment in real estate in the country.
Real Estate Investment Trusts (REITs)
With the introduction of REITs in India, the allocated global capital for dedicated REITs can be channelized in the country, thereby, increase foreign investments in it. However, it is critical that foreign investments are allowed in it and the tax regime for it is enabled. It is therefore imperative for the sector to ensure the success of the initiative in the long term.
Find out more about REITs and how they are weaving a success story in India.
Housing for all
The Indian Government has recently announced its vision of “Housing for all by 2022”. To achieve this ambitious target, the Government will need to come up with an optimum mix of budgetary support and policies to strengthen investors’ sentiments. They are required to make housing projects, especially in the affordable segment, financially accessible to people from all walks of life.
The challenge for successive Governments in India has been to bridge the housing shortage in the country which is currently pegged at 18.78 million housing units. The concept of mega cities is vital to this omnipresent demand for housing.
Introduction of smart cities is predicted to be a key growth driver for real estate in India. Smart Cities use information and communication technologies (ICT) and data to be more intelligent and efficient in the use of resources. It results in cost and energy savings, improved service delivery and quality of life and reduced environmental footprint.