The Indian real estate market continues to grow rapidly. There is a positive sentiment flowing throughout the country and the real estate market is riding the wave. According to the World Investment Report by United Nations Conference for Trade and Development, India is currently ranked fourth in Asia for FDI inflows in 2016. Indian real estate has attracted $32 billion in private equity so far. The global capital flow into Indian real estate stood at $5.7 billion in 2016 and is expected to attract another $ 5 billion in 2017. Coupled with India’s steady GDP growth, which has been pegged at 7.1 per cent for 2017, India’s housing estate sector is expected to almost double to $180 billion by 2020.
However, India’s realty sector growth does not paint a complete picture. The realty sector needs to cut down on regulations and improve legal enforcement of existing laws to better manage the rising prices. Although Prime Minister Modi has promised affordable housing to millions of middle-class families in India, there are growing concerns about the housing deficit in the real estate sector. Currently, the housing estate deficit is around 17.5 million units, most of the deficit is in affordable housing. Over 2,300 real estate projects were being developed at the end of December 2016 and out of that 826 housing and 60 commercial projects were facing significant delays, according to a study by industry body Assocham. Reports suggest that the maximum delay in the housing estate sector is witnessed in Punjab (48 months), Telangana (45 months), West Bengal (44 months), Odisha (44 months), Haryana (44 months), Madhya Pradesh, Andhra Pradesh and Uttar Pradesh (all at 42 months), Maharashtra (39 months), Karnataka, Rajasthan and Kerala (lowest at 31 months). The average delay in real estate project completion throughout India is at 39 months.
This is a growing concern for residents of India, as well as for NRIs looking to invest in the housing estate sector in India. The major reason for the delays is the time overruns in obtaining mandatory approvals from multiple regulators and authorities that lead to delays and corruption. The never ending legal battles, the multiple processes and the innumerable doors to knock, have all posed threat to this sector. NRIs looking to invest in luxury housing are also facing the same problem due to rising concerns about the security of their down payments and successful completion of projects.
Under these circumstances, there is a need to build trust and consolidate the procedures involved in the housing estate sector. There is definite growth in the real estate construction sector. India expected to be the third largest real estate sector globally by 2030 with over 15 per cent contribution to the overall Indian GDP and also emerge as the largest employer in India; providing employment opportunities to over 75 million people. However, there is need to consolidate the real estate laws and regulations. The projections are definitely inspiring, but there is a need for flag-bearers who can guide this wave of optimism.
I believe the legal sector will play an important role in further development of the housing estate sector, and there is definite need for better advisory and control of this sector. NRIs need to work with housing estate advisory firms who can guide them in this age of innumerable laws and regulations. The opportunities are innumerable but without control and guidance there is always the probability of projects getting stalled, developers delaying completion, and investors backing out. There is a deafening need for better control and guidance in the real estate sector, especially for NRIs. If you are an NRI, and if you have questions about the real estate sector in India, I would like to hear your views and opinions. My firm in India provides investment guidance, real estate advisory, consultancy in housing matters, legal management of real estate matters, and housing estate management. For further queries, get in touch here.