10 JUN 2019
As the nation takes a step closer to its 75th anniversary of independence the dream of getting rid of homelessness seems to be turning into a reality. But is enough being done to really deliver on the promise of "a roof over every head by 2022"?
The was promise was a vision shared by Prime Minister Modi during his last term in office. Since then, stakeholders have worked together in a movement that has gathered steam brick-by-brick — the real estate sector too has risen to the occasion.
On the path to deliver on this mandate, there have been several learnings. With government focusing on far reaching reforms — from regulation and taxation to land and labor laws — the industry will have to be nimble-footed to adjust to the "new normal" with high levels of compliance and the adoption of business best practices.
In India, affordable housing is defined in relation to income levels. Experience has indicated that these parameters have not necessarily influenced housing supply. Even today, a majority of the housing shortfall continues to persist among the EWS and LIG income groups, which comprise of the actual target audience for affordable housing.
The development of affordable housing is a growing social need that must be supported by a robust affordable-housing ecosystem. There is no denying Government's focus on this, however, there are several policy changes, better coordination between authorities and stakeholders, faster clearances and approvals, and other incentives, which must still be addressed, along with the biggest challenge of liquidity.
To take this challenge to the next level of difficulty, global and local economic indicators suggest that capital is only becoming scarcer by the day. Assuming we are out of shadows post-NBFC crisis, how can we tackle the need for easily available capital? This question is all the more pertinent for the housing segment given that the overall first-quarter investments in Indian realty are at a decade high. What needs to be done to boost investor confidence for the housing sector to flourish and grow?
Also for real estate to perform to its full potential the critical aspect is access to low-cost capital — this has been a prominent issue for a long time. While considerable improvement has taken place over the years with respect to the legal framework, which encourages inflow of foreign capital and direct investment in the sector, today, residential property developers are still finding it hard to come by adequate sources of capital.
There is a lot of learning and re-learning that the sector must undertake to ensure it becomes more transparent, professional, nimble and agile. Given the challenges that the sector has been grappling with, it is imperative that a conducive policy environment is created for stakeholders to harness its true potential. So, while RERA was believed to be the panacea for all real-estate ills, is the medicine really working on the disease or will it be a long wait for recovery?
The thinking behind the policy and procedural changes taking place in Indian real estate appear to reflect the creation of a positive business environment, an environment which will help attract investors and customers alike, and make the market more competitive.
But questions remain. Is enough actually being done to help business? Are all stakeholders clued into the economic and market trends changing real estate? And Will macro-economic conditions prevailing in the market see a mixed performance for the sector?