According to a prominent government official, India's real estate industry is anticipated to reach $1 trillion by 2030 as demand for housing rebounds from the "setback" created by the first and second waves of the COVID-19 epidemic.
“Two to three years ago, the real estate sector was valued at $200 billion. Today, it is expected to reach $1 trillion by 2030,” according to Durga Shanker Mishra, secretary of the housing and urban affairs ministry.
The market will be driven by rising demand for housing and recent reforms such as the Model Tenancy Act, the Real Estate (Regulation and Development) Act, and steps taken to increase ease of business in India, according to Mishra, who spoke at the Confederation of Indian Industry's event titled "Real Estate - Creating Demand: The REset 2021 and Beyond."
“About 7 crore (70 million) people are estimated to be working in this industry in the future,” he added. In 2019, 55 million individuals were working in the real estate industry.
States have been told to implement the Model Tenancy Act, which was enacted by the Union Cabinet in June, as soon as possible, according to Mishra. Concerns over the fate of traditional ‘pagdi agreements' in Mumbai were addressed by Mishra, who stated that the new rule would not be retroactive and that current rent arrangements would not be affected.
He added, alluding to current agreements, that it would be prospective. “Once states pass this legislation, the market will be opened up. Houses may be used as hostels as well. The dead investment will begin to pay off.”
Growth in metropolitan areas will also help to boost demand. By 2051, over 880 million people are anticipated to reside in towns and cities, up from roughly 460 million today, generating enormous real estate development opportunities.
RERA, according to Mishra, has altered the way people think about real estate. Mishra stated, "Consumers now trust their investments are safe."
RERA has over 67,000 real estate projects and 52,000 real estate agents registered. More than 70,000 cases have been approved by the real estate authority established under this statute. All states, apart from West Bengal, have implemented RERA, he said, adding that the ministry has written to the state government about this.
On the ease of doing business, Mishra stated that India has improved significantly on the criteria of construction permits, rising to 27th place from 186th place previously.
He said that the government has made it possible to apply for construction permits online, which would assist to minimise delays and corruption. “By March of next year, we hope to have all 4,000 municipalities and localities providing online construction permits,” he added.
According to Mishra, the government's Affordable Rental Housing Complex plan, which aims to construct houses for migrant workers, would also open up economic prospects for the industry. He urged developers to concentrate on cheap housing and to consider the desires of the younger population.
“It's critical to investigate what kind of homes the younger generation want and can afford. Do they prefer 60-square-metre or 90-square-metre flats with all contemporary amenities? The key is unit affordability,” he noted.
Mishra also emphasised the need of using cutting-edge technology in the building industry. Six cities have been chosen for the implementation of some of the greatest construction technologies in the housing industry as a result of the Global Housing Technology Challenge. “New technologies are the most resource-efficient, and they will speed up the construction process,” he added.
High government levies and finance expenses, according to Neel Raheja, co-chair of the CII National Committee on Real Estate and Housing and group president of K Raheja Corp, are impeding affordability. “Despite obstacles, the Indian real estate market is growing, with new prospects coming from sub-sectors including warehouses, data centres, and logistics,” he added.
He also cited the Reserve Bank of India's high-risk weighting for the real estate sector, which he said was a barrier to obtaining inexpensive financing.
“There are constraints on InvIT and REIT financing, land financing, foreign portfolio and ECBs that need to be investigated for the real estate industry to get low-cost funding for the housing sector,” he added.
Anshuman Magazine, deputy chairman of the CII Northern Region and chairman and CEO of CBRE for India, Southeast Asia, the Middle East, and Africa, voiced optimism in all real estate categories.
“Low-cost capital is circulating across the world, and the Indian real estate market is set to profit from it and attract investments,” he added.
Godrej Properties' managing director and CEO, Mohit Malhotra, said that equity capital is needed to fuel development and that the newest technologies should be employed to boost efficiency. “The industry should now focus on recruiting equity capital and look at incorporating corporate culture, professionalism, governance, a customer-centric approach, and increased productivity,” he added.
Source: Money Control