“REAL ESTATE INFLECTION POINT: READYING FOR THE FUTURE”
Housing and real estate in infrastructure sector have traditionally been significant contributors to the socio-economic growth of the country. The development impact contributes significantly to employment generation, country’s investment, financial growth and overall quality of life of the citizens of the country. The symbiotic effect of growth of real estate with over 250 upstream and downstream industries creates a multiplier effect for the demand and supply of input sectors and real estate services. Though at present the sector contributes 7- 8 percent of the GDP, it is expected to contribute close to 13 per cent of the country’s GDP by 2025, reaching a market size of USD 1 trillion by 2030. Real Estate sector has been the second largest investment puller for the Indian economy, contributing to nearly USD 24 billion in Foreign Direct Investments.
The country’s socio-economic demographics have also witnessed a significant change with rising disposable incomes and rapid urbanization. With the increasing urban rural migration and population expansion across major financial hubs, real estate and supporting infrastructure has come under tremendous pressure in meeting the needs of urbanization. Given this mammoth task, the Government requires major interventions for private sector participation to meet this mass housing objective and achieving developmental goals. During its past tenure, Affordable Housing for All 2022 was pushed through a primary agenda by the Government, backed by aggressive efforts in policy reforms, tax regulations and implementation mechanisms. With the second term coming into effect, the current Government bears the empowerment and responsibility to see through the interventions implemented towards achievement of the affordable housing agenda. It is estimated that India requires funding of USD 2 Trillion till 2022 to meet the housing shortfall of 110 million housing units. In addition, there is growing need for provisioning of support infrastructure and services to cater to the rising housing demand, requiring an additional USD 1.5 by 2030. The Government has promulgated macro infrastructure development initiatives such as AMRUT, Smart Cities, Infrastructure & Freight Corridors, Transit Oriented Developments, Public Asset Monetization, Inland Waterways, Metro development etc. to affect large scale improvements, indirectly impacting real estate sector and creating opportunities for harnessing real estate potential in infrastructure projects. The Government encouraged interventions and policy reforms. To stimulate consumption, Government has announced rate cuts, credit linked subsidies, input tax credits, relaxed FDI norms, and accorded infrastructure status to affordable housing as a positive step towards fast tracking housing & infrastructure development,
Relative to this positive scenario, the real estate sector is increasingly struggling to deliver in sync with the Government developmental agenda. The implementation of policy and regulatory reforms (GST, RERA, etc.) have created impacts leading to industry restructuring, shrinking liquidity, increasing stressed asset inventory, insolvencies, etc.; upsetting the overall real estate lifecycles, costs and delivery timelines. The compounding effects have brought about an overall sectoral slowdown leaving private real estate sector with limited resources to support the overall development agenda. The Government has set the stage for large scale transformation in the previous term and this needs to be followed up with better convergence, higher efficiency and supporting financial ecosystem to continue the momentum.
In context to past few years, Indian real estate sector has been positively impacted by industry disruptions. These emerging disruptions are creating alternate avenues for real estate assets development and utilization. Taking cues from the global con-tech revolution, the Government and private sector are actively collaborating for adoption of construction technologies through interventions under Global Housing Technology Challenge. These aim to launch ‘lighthouse’ pilot projects by utilizing sustainable, cost effective and replicable technologies and fast tracking housing stock delivery. Emergence of prop-tech and e-platforms have impacted transaction time and costs positively for varied real estate asset classes. Select segments within the real estate such as Commercial Real Estate (CRE) has witnessed exponential growth and positive investor participation in the Co-Working business domain. With regards to housing and hospitality real estate, Co-living models and rental platforms have served as catalysts to efficient utilization of real estate. The advent of student co-living and student housing has supplemented rental based incomes, ensuring better operational utilization of housing related assets while improving quality of housing for burgeoning student population. As conventional funding means come under stress due to diminishing market liquidity, alternate mechanisms such as REITs and INVits have gradually etched their way in as promising complementary sources of real estate financing.
Real Estate Sector in India seems to be at an inflection point presently. As conventional real estate businesses work in tandem with Government in facilitating housing and macro infrastructure development goals, emerging business formats, transaction models and policy interventions need to be explored for greater gains. In the global context, rental housing mechanisms, construction sector workforce skilling, technology incubation, sustainable technology adoption, and cooperative business models have proven to be workable solutions in addressing the housing and infrastructure need gap. Adoption of new models and convergent policy reforms can likely result in new opportunities and streamlined growth in real estate and construction sector, snowballing the macro multiplier effect.
In view of this, NAREDCO is organizing its 15th national convention to brainstorm strategic and tactical interventions aimed at affecting improvements in the industry’s operational landscape and capitalizing potential of emerging trends. This convention aims to serve as a centralized platform for all stakeholders comprising policy makers, central and state ministerial departments, national and state level implementation agencies, public and private institutions, financial investors, real estate developers, industry experts, and new business pioneers to converge, deliberate industry challenges, evolve workable strategies and recommend action plans for ‘future readying’ the Indian real estate sector.
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