TRENDS OF REAL ESTATE IN INDIA – KW GROUP

  • @kw
  • 17 Apr 2019

Indian Real Estate has been undergoing a sea change due to rapid urbanization. The population count in major cities are growing at a very fast pace and expected to be 814 million by 20150 as per the survey by World Economic Forum. This explosive situation is due to higher employment opportunities in cities and people feel their living style would be better in cities. This condition is creating tremendous pressure on providing proper infrastructure and public amenities. The only solution is to expand the boundaries of cities. Delhi has now expanded, Delhi NCR includes all adjoining town and tier 2 & 3 cities like Noida, Gurugram, Ghaziabad. All these cities have experienced a major cultural shift in last decade or so. This demographic shift is due to fast shift that is taking place in urbanized cities. Raj Nagar Extension is a pocket in Ghaziabad which has been growing at an exponential pace with large housing complexes being constructed by large number of builders and Commercial spaces including Malls are being built by Reality majors. The Development of infrastructure and facilities is the responsibility of Central and State Government which has been encouraging Public Private Joint efforts by involving builders for all kind of projects to alleviate the pressure of fast influx of rural and sub-urban population into the boundaries of cities for employment and better living.

Cities are the main focus point for contributing to growth and development, accounting for almost 70% of gross domestic product (GDP). The development of new cities with good infrastructure is attracting industries to put up their plants and thereby requirement for more housing projects. In fact India needs to make available 700 to 900 million square meter of space every year to accommodate India’s growing urbanization. At present there is a shortage of 10 million homes in the category of affordable home.Goverment program in the recent years have encouraged builders to construct affordable home with certain incentives announced. 

In India the Real Estate sector is growing at a very fast speed and expected to reach USD 1 Trillion by 2030 will contribute about 13% to country’s GDP by 2025. The growth in housing is providing major impetus to the growth of Retail and Commercial real Estate sector. FDI has grown in size by leaps and bounds after liberalization policy of the government. Between “2009-18”, Indian real estate sector attracted institutional investments worth USD 30 billion. Private Equity and Venture Capital investments in the sector reached USD 4.47 billion in 2018 and USD 546 million in Jan-Feb 2019.

According to data released by Department of Industrial Policy and Promotion (DIPP), the construction development sector in India has received Foreign Direct Investment (FDI) equity inflows to the tune of US$ 24.91 billion in the period April 2000-December 2018.

India has moved up in the Global Real Estate Transparency index. It has moved up by 5 notches from 40 to 35 since 2014. Government has brought in significant changes since 2016 to regulate and monitor the activities of Real Estate Developers to bring in more transparency. State wise Real Estate Regulatory Authority (RERA) regulation is now in force and buyers can easily view details of the Developers on RERA Website. Government has also done away with multiple taxation policy by bringing in single point Goods and Service Tax ( GST ) and made the system more technology driven. GST on affordable housing has also been reduced to bring in more momentum in the housing sector. In Delhi NCR large numbers of housing projects are attracting interest of first time buyers in areas like Raj Nagar Extension, Ghaziabad show casing the changes that has been brought by the Government in the recent past. 

Government has taken the initiative to bring in Smart City Projects, where it is planned to build 100 smart cities. It is a prime opportunity for Real Estate Companies. Under Government initiatives Pradhan Mantri Awas Yojna (PMAY) Urban, a sanction of 6.85 million houses has been initiated, In February, 2018 an outlay of Rs.60,000 Crores fund has been approved under ‘National Urban Housing Funds’.

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