The Real Estate (Regulation and Development), Bill 2013 has evoked sharp responses. The industry protests it will mean more inspector raj while consumer advocates and realty service firms welcome it. Our experts will help you build your case with the policy formulators.
The real estate sector can be split into housing, retail, hospitality and commercial segments. It has been a favourite investment destination for Indians. Offices and shops in supermarkets joined houses as an investment avenue as the economy boomed. Government policies and bank lending helped the sector become organised and grow. The booster steps included repealing of Urban Land Ceiling Act, liberalistion of floor space index (FSI) rules and focus on infrastructure development. The revenues of the sector are expected to nearly treble to $180 billion by 2020. India witnessed a housing boom in the first decade of the new millennium. The demand grew not only in the metropolitan cities but also Tier II and III cities with commercial and strategic possibilities.
The sector is currently going through hard times as the economic growth stutters and consumers tighten their purse strings. This is especially true for the metros. The builders and home buyers seem to be in a stand-off, both expecting the other party to blink. The ministry of housing and urban poverty alleviation estimates that more than 11 million homes are lying vacant in urban areas as the buyers wait for fall in prices while sellers hold on in the hope that the value will only appreciate further. The corporate sector too is being cautious and preferring to shift to office spaces with lower rentals.
The sector is the second largest employer after agriculture. It is feeling the crunch as government welfare schemes such as Mahatma Gandhi National Rural Employment Guarantee Scheme provide adequate wages and jobs to villagers who otherwise migrated to city in search of work. Land acquisition for projects is another problem it faces. Farmer agitations and court rulings often add to the unease.
The sector provides immense opportunities. The infrastructure demand from schools and universities, hospitals and hotels is expected to continue to grow besides that for offices, commercial and industrial spaces. Foreign direct investment of up to 100 per cent is permitted under the automatic route in townships, housing, built-up infrastructure and construction development projects. The ministry of housing and urban poverty alleviation plans a single-window clearance of real estate projects, which could slash the time taken for approvals from the 196 days to less than 60 days. The government of India has sanctioned projects of over Rs 41,500 crore for construction of more than 15.5 lakh houses under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). The finance minister has earmarked Rs 6,000 crore for Rural Housing Fund while the National Housing Bank plans an Urban Housing Fund of Rs 2,000 crore. These are just the government initiatives.
(Disclaimer: The information has been aggregated through secondary research. IFIE is not responsible for errors if any)