Indian Real Estate growth graph post 1991 liberalization

Dr. Niranjan Hiranandani, National President, NAREDCO

1.      How has the Indian Real estate sector performed post-independence and how far it has been successful to deliver housing for all?

Indian real estate has evolved over the years, we now have reached a situation where global best practices are an integral part of the eco-system. Implementation of reforms like RERA have also played a major role in ensuring that real estate deals are transparent and that the home buyer has options to redress any grievances. Accountability is an integral part of the ‘new age’ real estate developers; home buyers are assured of a safe and secure transaction. This, in a nutshell, is how Indian real estate has evolved since independence.

Have we been successful when it comes to meeting requirements of home seekers, this is an issue where the answers we need come from initiatives like PMAY rural and urban. To my mind, this initiative is the first such effort, which will ensure that the homeless have a good opportunity to make their ‘dream home’ a reality. Across other segments, the developments have been positive – low home loan interest rates, to give an example, have powered many a home seeker to buying their own home. Initiatives like reduction of Circle Rates (Delhi) or reduction in stamp duty (Maharashtra) have contributed immensely to home seekers being able to make their dream homes a reality.

Yes, we have a long way to go before every Indian has ‘shelter’, and the way ahead will include rental housing as well – not just owned homes. As humankind comes to grips with surviving in the ‘new normal’ where we co-exist with Corona, a home is the safest place to be, many citizens are opting to buy their own homes. This is a positive trend, and we should see better days ahead when it comes to housing the Indian population.

2.       The 1991 liberalization policy regime saw emerging of middle class home buyers. How has been the growth so far?

The reforms in 1991 have definitely played a major role in creation of larger consumer categories, and with affordability going up, the number of home buyers also went up. This largely relates to homes created by private sector real estate developers, and over the years we have seen new categories of home buyers in the real estate scenario. The New Millennial home buyer, for instance, is among the newest segments – these were traditional renters, who have in the aftermath of the pandemic, turned home buyers. This segment always had the funds, but opted to rent; now they are among the largest chunk of first time home buyers. So yes, economic reforms helped create a consumer segment, but for the different sub-segments to actually buy a home takes more than just funds. This sentiment, which powers the actual home buying, to my mind, is what the reforms brought about.

3.       Roadmap to achieve Housing for All?

If we look at the numbers, Housing for All is doing much better than any previous initiative since independence. As a nation, we need to understand two aspects. First, not all housing has to be owned: rental housing, globally, meets the shelter requirements of a large chunk of humankind, this will also work in India once the new Tenancy laws are implemented. Secondly, the success of initiatives like PMAY have increased expectations and in effect, brought out the desire in many more Indian citizens to own their own homes. Women home buyers are one segment which is steadily growing, and it reflects the positive change in Indian society – the process has begun with working women in urban areas, and this ‘revolution’, if I may be permitted to term it, will expand and cover the entire country. It is a long journey, one which has been slow for many decades. It is recently that the process has accelerated, and with schemes like PMAY getting positive results, we should see the country’s homeless get shelter; and not just a roof over their heads but a proper home.

4.       New instruments and factors in real estate market?

The future will see new paradigms, with the industry now being regulated through RERA. Indian real estate has many roles to play; it is also a wealth creator and steady income/ retirement plan in the form of an investment that gives monthly rental. In investment options, REITs and INViTs offer excellent investment options for small investors. Consider the new Tenancy laws: the biggest plus point will be the huge opportunity for investment which it will create; in turn fulfilling rental housing demand. The new age home buyer wants global best practices when he or she buys a home; the industry is geared up to providing the same – with further positives in the pipeline. The Public Private Partnership (PPP) model will see more instances where private sector real estate developers will join hands with authorities who will provide land, and the resulting partnership will see creation of affordable housing stock. The most interesting development will be the high-speed transport linkages being created in form of highways and expressways; these will provide seamless connectivity to locations which were considered remote. The future will be about integrated townships being created in such locations, with the infrastructure growth story powering development of many such urban conglomerations across India’s highways and expressways. The future is bright; and dream homes will become a reality – and at a quicker rate than we would expect.