Winds of Change Transform  Post- Independent Real Estate 

India has made remarkable progress since it attained independence 75 years ago. Real estate has not been left behind either. Rather, this once hugely beleaguered sector has made history-defying  strides, especially in the last 8-10 years.Today, amidst this massive transformation, the real estate sector features prominently in this revitalized avatar of India establishing its mark on the global stage. country on the move. . 

What has transpired over the years and what lies ahead for the real estate sector , is  quite evident from the winds of change that has been sweeping the sector. As post- independent India’s population grew over time, cities expanded to create habitable localities and industries for its economic upliftment. Chandigarh was the first planned city of independent India – one of the successful attempts of urban planning and modern architecture. To address the ever-increasing need for housing, the government set up institutions like the Housing and Urban Development Company (HUDCO), City Industrial and Development Corporation (CIDCO), and the National Housing Bank (NHB). 

The liberalization of policies in the 1990s facilitated significant changes in the real estate sector. Many international companies jostled to establish businesses in India, triggering a consistently increasing demand for commercial and residential real estate.The rapid growth of the IT-ITeS sector resulted in the expansion of new urban centres across major cities like Bengaluru, Chennai, Hyderabad, Kolkata, MMR, NCR, and Pune. These cities were the first to witness changing skylines and rapid vertical development. 

At the turn of the century, the sector was further invigorated when liberalisation of policies pertaining to  foreign direct investments allowed the entry of global investors. This catalysed the development of malls and other organized retail spaces across the country. 

Housing For All 

 With the launch of the  Pradhan Mantri Awas Yojana (PMAY) programme, the social housing sector – mainly aimed at the economically weaker sections  gathered momentum over the last decade. PMAY was launched with a specific purpose to fulfil the  ambitious target to provide Housing for All by 2022. In the country’s urban areas, the development has been tangible. 

(Source: PMAY – Urban, compiled by ANAROCK Research) 

 To provide momentum to affordable housing and generate demand for it, the government  provided  interest subsidy to be paid to financial institutions lending to home loan  borrowers . As a result of this, the cost of ownership for the prospective home buyers came down, It also empowered women with the social security of having their own homes – a significant sea-change in a once highly patriarchal society. 

 The flagship  Smart Cities Mission launched to  develop 100  technology-enabled  smart cities to drive economic growth and offer significantly improved quality of life to citizens, is making significant strides.. Currently, there are 5,151 projects under this mission across the identified cities, with investments to the tune of INR 2,05,018 crores. 

Transformative Reforms 

Various reforms and structural changes undertaken by the government, have been instrumental in altering the real estate sector. Today, , the sector has seen transformative change with good  governance, transparency, and accountability as its hallmarks , Many corporate business houses have also ventured into the sector. Prominent and listed real estate players are successfully gaining market share and helping the industry consolidate – a much-needed process that steadily eliminates the undesired elements , thus steering the real estate towards healthy growth.   

Some of the significant reforms in recent times and their effects: 

Some significant reforms have resulted in a far reaching positive impact. The taxation reform – GST was conceived and implemented to enable a uniform tax code across the country. As part of this reform, completed real estate projects are exempted from GST, and affordable housing projects are levied with GST of only 1% to keep the momentum of demand high. As another leading reform- Real Estate Investment Trusts (REITs) have emerged as a great option for Indian investors to add real estate to their portfolios for better diversification and risk mitigation. The REITs operational in India today are mainly in the commercial office segment. The total market cap of these REITs is estimated at INR 60,584 crores.The landmark reform of RERA is the most significant post-independence reform to positively  impact the unorganised Indian real estate sector by regulating it.This Act aims to safeguard the interests of homebuyers and investors and make developers accountable for their projects. The Act makes all relevant project details, including the approvals and permissions, that provide a mechanism for redressing complaints and grievances of the homebuyers. . 

RERA establishes specific standards for the construction and development of real estate that aim to improve transparency in real estate transactions. It has given homebuyers several rights and has set forth specific laws and regulations that all developers must observe. In the five years of its existence, 87,124 projects and 65,500 agents have been registered across the country. The regulator has successfully disposed of 97,404 complaints, paving the way for a stronger and more resilient real estate sector. Though RERA is in many ways still a work-in-progress, with loopholes and lacunae getting addressed along the way, yet it is safe to say that it is the one regulatory reform that has genuinely empowered real estate end-users and investors.  

Way Forward 

As the nation progresses rapidly and requirements evolve, real estate products, services, and assets will grow too. Many new-age real estate asset classes such as senior living and student housing are already gaining momentum. Data centres, warehousing, and industrial parks are the new buzzwords in the sector. They will gain further traction as the incumbent government focuses on its visions of Atmanirbhar Bharat and India becoming a USD 5 trillion economy. 

As these sectors and economic activities rev up, housing for the workers will pose a significant challenge. The government has already laid the framework for affordable rental housing for private participation, but there is still a lack of clarity. ARHCs (Affordable Rental Housing Complexes) are now much required in post-Independence India to fulfil the government’s Housing for All vision. 

RERA needs to evolve because there is still many a slip between the cup and the lip. Judgments need to be backed by firm enforcement, and the Act needs to have a more uniform impact across the nation. Just as the Indian Penal Code cannot have state-specific interpretations and financial benefits by the government do not vary between geographies, RERA must ultimately provide Indian homebuyers with a seamless protective and remedial umbrella, regardless of where they live in the country.This will be no mean task to achieve, and will doubtlessly take time and considerable political will to make it happen. Finally, investments will hold the key to scale up real estate and urban development, needed to catapult the Indian economy to USD 5 trillion mark.