Real estate future prospects in India

The real estate is all set to see a boom by 2020. The realty pundits have predicted a positive future for investors and customers who are waiting for the prices to stabilize and expecting on-time schedules for colonizers’ projects.As per realty forecasts, the Indian real estate market may very well arrive at the figure of US$ 180 billion by 2020. Of this, the housing sector is set to make a contribution of 5-6 percent to the country’s GDP (Gross Domestic Product). The market has been expanding and is supposed to grow at a Compound Annual Growth Rate (CAGR) of 11.2 per cent. All the segments of real estate like retail, commercial buildings, and hospitality, are significantly seeing a rise in tide to match the growing needs of infrastructure in India. However, there are bound to be some basic transformations that will shape the new face of real estate. The consumer of today is a global citizen with a broader database of knowledge and exposure to international standards. In order to cater to this category of alert consumers, the realtors are also gearing up to meet the new challenges in their market. The trend has, thus, changed — real estate businesses are now being managed by professional hands rather than just families. The result — the best of knowledge and expertise in every field — right from project management to architecture to engineering, is now available at their fingertips.

Further, the growing presence of FDI in the Indian market is contributing to larger transparency in the real estate sector and the developers have revamped their accounting and management systems to improve their standards so as to gain large funding for their projects.

Throughout the country, real estate projects have seen increased investments by Private Equity (PE) funds and Non-Banking Financial Companies (NBFCs).

The increasing GDP per capita will further boost the real estate investment leading to great opportunities in India. In three to four years, investable real estate is destined to see a growth of more than 55 per cent, as compared to 2012.

Cities are growing fast and they will create a wider range of return opportunities. Add technology innovations to this, and the sustainability of buildings will increase manifold. Those who fail to adopt new technologies in their quest to provide the finest to their customers are sure to become obsolete. A very important feature here is the government’s role and partnership with developers to mitigate risks in urban development projects.

RERA—A win-win empowerment of the customer

The Act for setting up Real Estate Regulatory Authority (RERA) is a watershed in the history of real estate development of India. Now on, states stand empowered to set up their state authorities to regulate the sunshine sector of the economy. To be created on the lines of the already existing authorities in the booming cities of Dubai, RERA shall monitor both the residential and commercial sectors all over the country. The authority has been set up in view of the long pending demands of the consumer awareness groups and suggestions of various bodies for improving the market sentiment in the real estate sector.

Once set up, this authority would also be the grievance redressing forum for those investing in the real estate. This will happen after the ratification of the new law by state legislatures. Also, the builders will not be talking in terms of super areas; rather, the property will be sold in terms of carpet area. The builder will have to park 70 per cent of the project fund in a dedicated bank account that shall further strengthen the customers’ sense of security when they make the investment. The Act makes it mandatory for the builder to share the complete plan, layout, mandatory approvals and even the status of land title. Even the names of the subcontractors would have to be made available to the customers. Furthermore, the builder will not be able to make any changes to the plan once a particular product has been sold. In the eventuality of the project getting delayed, he has to pay the same interest as the EMI being paid by the consumer to the bank, back to the consumer. Any project of 500 sq mts or above and consisting of eight apartments or above has to be registered with the authority. It will also ensure entitlement of customers for the after sales service. Any infringement of the provisions of the clauses and sub-clauses of the working of the authority would entail heavy penalizing, even to the extent of imprisonment.

However, in the light of the provisions of the Act, the government too should further smoothen the procedure for giving permissions. Red tapism needs to be reduced and government reforms should be applied promptly all over the country. All information and status updates should be made available on the Internet.

If acted upon to its utmost spirit, the RERA Act will bring cheer to the sector as more and more end investors shall find themselves empowered and sure of their investments.