By Dr. Niranjan Hiranandani, National President, NAREDCO
As our nation rejoice the celebration of 75th Independence Day this 15 August 2021, it embarks upon a futuristic journey towards ‘Shine India’ globally. Construction and Real estate sector is a fundamental building block for an accelerated and employment inclusive economic growth.
Today, let us glimpse through the traverse of Indian Real Estate growth story with hits and misses-
The Story of Evolution: Evolution has happened over several decades where the real estate sector has been successful to mirror the Indian economy, reflecting economic prosperity. The growth curve started from navigating an Opaque unstructured business to the deep impact of bureaucratic pressures, delays amid license raaj, to transparent and compliance mechanism friendly in the Era of RERA.
Past Regression : The stages of Indian real estate development such as the first planned cities in the 1950s and 60s (Chandigarh, Gandhinagar) are today known as ‘Smart Cities’; to policy initiatives and upgradation (Maharashtra Regional and Town Planning Act, 1966) till the recent set up of important institutions viz NHB, HUDCO, MMRDA – represents substantial nodes of development.
Liberalization and Entrepreneurship: The 1990s saw the economy overthrow the shackles of license raj and excessive restrictions. As the Liberalization reforms kicked off, India Inc. saw spikes in emergence of domestic entrepreneurship class along with global entities optimistically venturing in India with long term goals. Simultaneously, real estate asset gained eyeballs from the global indians as the preferred asset class to invest in a ‘nest back home’.
From Yahoo to Lehman Brothers: The period from the new millennium 2000 to 2008 saw a series of policy tweaks skewed towards business growth. India grew as an IT and ITeS power, reflecting well on the real estate sectors of cities like Bengaluru, Hyderabad and Pune. The FDI policy and the adoption of the PPP model were the big bang reforms of the decade. Black swan year of 2008 saw the global economies crippling towards the Lehman Brothers crisis. Indian real estate slowly paved its way out of the quagmire, but undercurrents lasted for a substantial time.
Tsunamis and System Reboot: The new government in reign from 2014, rolled out bold steps by introducing various structural reforms focusing on economy, industry specifications and taxation. Demonetization is an apt example of reforms which impacted real estate in the manner that a Tsunami would. ‘Short term pain for Long term gain’ is an adage which somehow, has not reflected in terms of the pain being ‘short’. Real estate has witnessed the price points being stagnant since demonetization, and there has been little upwards movement since then. If one considers inflation and prices remaining stagnant, the burden borne by the real estate becomes all too apparent.
Watershed years of Regulation: The enactment of the historic act of RERA acted as a game changer in alignment with peak global practices. By bridging the gap between trust deficit and accountability, it has helped the sector to get an organized modus operandi. The financial and compliance mechanism introduced the transparent and structured line of performance. But, Industry pegs hope that on the onus of beyond control delay due to bureaucratic regime should also be considered under RERA and levy penalty where earlier only developers were represented as the culprit.
GST – The next big Tax reform aimed at ‘ One Nation, One Tax’ changed the rules of play to bring in uniformity across the board. This also, opened the floodgates for new sunrise sector of Logistics and Industrial parks to flourish beyond any geographical boundaries.
Homebuyers as Creditors Under IBC: The path breaking reform of Insolvency and Bankruptcy code witnessed the age of the homebuyers as a equitable stakeholder.
These reforms have been inclined towards customer centricity. The devastating impact of global covid-19 pandemic on humankind underpinned the value of owning a house. The homes that brought stability and safety also acted as a safe bet investment in comparison to other volatile paper assets. The concept of ‘homebuying’ got elevated as the most traction basis emotional and financial alluring sentiments during covid times.
Economy Building Block: It is a wealth creator, providing shelter with quality of life which went on to become the second largest job creator after agriculture. It supports growth of 270 allied industries as also among the leading drivers of GDP growth. If the dream is for India to grow into a $ 5 Trillion economy, real estate will play a major nation building block. Real estate today is: structured and streamlined. Not just that it is an economic growth driver, it also boasts less than 2 per cent NPAs – a small number, which speaks volumes. Going ahead, it is about mergers and takeovers, about consolidation and joint ventures. And, the buzz word is: ‘new asset class’, which includes data centres and co-working or coliving shared spaces.
Formalization of Rental Housing- To meet the ambitious goal of Housing for All, affordable rental housing will play a catalytic role. Demolishing old archaic tenancy act rules have opened a new canvass for industry to accord dreams of millions of migrating home seekers. Rapid urbanization will fuel the growth of rental housing a win – win scenario for both developers and home owners.
Formal Degree Stamping : The driver of GDP growth, real estate now also attracts millennial professionals and next gen entrepreneurs. Formal degree academic courses have been specially tailored to suit industry needs by educational institutions. The new age real estate is powered by intellectual human capital who have not just been through formal education, but have also been reskilled and upskilled to drive along the dynamic future course.
Crystal Ball Gazing: Covid disruptor accelerated living in a digital era. The digitization has transformed the business continuity plans and future roadmap. Automation will play an integral role as technology makes major inroads into construction and real estate development. Be it sustainable eco-friendly green homes or Smart tech Homes, all will delve on great advancements. A major role will be played by new age Prop-techs across the entire spectrum of real estate business functions. Artificial Intelligence (AI) and Machine Learning (ML) will form the base of the new age tech-enabled real estate
The New Age Customer: Reinvented epicentre of real estate sector with development and policies will gain momentum towards ultimate ‘Customer Delight’. The New Millennial segment, traditionally were renters, are now among the leading segment of ‘First home buyers’ where female home buyers saw a rapid emergence. Considered as a future Wealth creator, the new investment options includes globe favourate REITS and InVITS.
Future Perfect: As homes evolve, so does home buying. From digitally powered sales, home financing to documentation process will soon shift to blockchain tech platform.
Wellness, Community living and Sustainability will be the key components for new smart homes under new normal lifestyle post covid times.
I have envisioned the trend of popping up of infrastructure driven new real estate hubs, which will offer holistic living with all at one stop destination. This will be a spin-off of hundreds of kilometers of new highways, inland waterways, metros being constructed all across the country. Existing cities will evolve into Smart Cities, providing existing residents with excellent living standards.
In Conclusion: To sum up, the future will be a success story scripted by policies defining the product through new practices and narratives. As India celebrates the onset of 75th Independence Day, let us all come together and work towards the goal of a truly self-reliant Aatma nirbhar Bharat – Jai Hind!
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