A Closer Look at the Evolution of Real Estate in India
Over the past several years, real estate investment in India has flourished. With a growing economy, a burgeoning middle class, and a rapidly urbanizing population, India ranks among the top 10 price-appreciating housing markets internationally and is a respectable 36 on the Global Real Estate Transparency Index 2022.
The Global Real Estate Transparency Index evaluates nearly 100 countries and 150 urban areas using over 250 metrics that cover factors such as regulation, governance, and environmental, social, and governance (ESG) issues.
The United Kingdom leads the 2022 rankings, followed by France and the United States in second place, with Australia in third place. The Canada real estate market ranks fourth, completing the top five. Canada’s highest rank is third in the regulatory and legal sub-category, which includes considerations such as real estate tax, land use planning, building controls, property registration, the enforceability of contracts and debt regulation.
It is encouraging to note that India has made considerable progress in real estate transparency, placing it among the top ten most improved markets worldwide.
Factors driving change for real estate in India
The Indian real estate industry is predicted to reach a market size of US$ 1 trillion by 2030, fuelled by a surge in demand for both residential and commercial properties. The government has implemented various initiatives to encourage the construction of affordable housing units, including tax breaks and subsidies for developers. The economy’s growth has also led to increasing demand for commercial properties, such as office and retail spaces, in major cities like Mumbai, Delhi, and Bangalore.
The growth of the Indian middle class, which is estimated to be around 300 million people, has been a significant factor in driving demand for residential properties and has resulted in an increase in affordable housing projects. This trend has caught the attention of both domestic and international investors.
Furthermore, the rapid urbanization of the population has created a pressing need for more housing and commercial properties, leading to a surge in construction activities as developers race to meet the growing demand for real estate.
A major challenge in the Indian real estate industry is the lack of transparency in pricing and quality, which makes it difficult for home buyers and investors to make informed decisions. To address this issue, India has implemented initiatives to encourage responsible and transparent behaviour at both national and local levels, such as requiring the largest 1000 companies to report on their compliance with responsible business conduct guidelines.
Additionally, institutional investment and the growing numbers of REITs help to increase market data, greater professionalization of the sector, and digitization of land registries which is expected to improve market transparency.
Regulatory challenges and initiatives
The Indian real estate industry faces complex regulatory hurdles due to varying standards at the regional and national levels, leading to delays in project approvals. Delays in projects have been caused by a range of factors, including land acquisition issues, regulatory problems, and construction delays.
However, over the past few years, India has introduced several regulatory initiatives to enhance transparency in various sectors, including real estate. These initiatives, such as the Real Estate Regulation and Development Act of 2016, the Goods and Services Tax, the Benami Transaction Prohibition Act, and the Insolvency and Bankruptcy Code, aim to enable investors to make informed decisions and promote responsible industry practices.
Funding and investments
The Indian real estate industry heavily relies on funding from banks and financial institutions, which has slowed down in the past decade due to rising non-performing assets. However, foreign investments have played a crucial role in driving the industry’s growth in recent years, attracted by the potential for long-term growth.
Reforms in India have also helped promote better professional standards for property agents and stronger anti-money laundering regulations, preventing illicit finance. In 2022, real estate investments in India reached an all-time high of US$7.8 billion, registering a 32% yearly increase, according to CB Richard Ellis (CBRE) South Asia Private Limited.
Developing a skilled workforce
As the Indian real estate industry experiences significant growth, there is an increasing need for skilled professionals in the sector. To address this, the industry needs to focus on developing academic courses that produce industry-ready professionals, training and development programs for existing employees, and collaboration with industry bodies and associations to promote knowledge-sharing and best practices.
In India, numerous certified courses are accessible to equip individuals with the knowledge and skills required for various careers in the industry. Recently, Save Max Global Education and Lamrin Tech Skills University (LTSU) have launched their MBA and PG programs that specialize in the Indian Real Estate field. The LTSU-Save Max Program is an all-encompassing course that provides students with the necessary skills and knowledge to excel in the organized real estate sector.
It is essential to prioritize the development of skilled professionals to keep up with the evolving needs of the industry and meet the demands of the new-age and technologically savvy clientele.
The Indian real estate industry has faced challenges in meeting the demands of a more informed and technologically adept consumer base, adapting to globalization, and improving productivity while addressing environmental and financial issues. These challenges include a lack of transparency, a complex regulatory framework, a shortage of skilled professionals, and the need to meet global standards.
To address these challenges, the industry has to take measures to prioritize transparency, accountability, and quality. Developers must embrace technology and become more customer-centric and innovative. They must also meet global quality and regulatory measures to stay competitive. Academic courses and training programs can help develop a skilled workforce, while collaboration with industry bodies and associations can promote knowledge-sharing and best practices.
In conclusion, the Indian real estate industry is adapting to the changing landscape and demands of the market. By prioritizing transparency, embracing technology, and developing a skilled workforce, the industry can meet the demands of the new-age consumer and stay competitive in a globalized world while addressing environmental and financial issues.