Indian Real Estate must address roadblocks to accelerate growth

The basic mantra for INDIAN REAL ESTATE SECTOR is to: 

dilute licensing except for safety reasons, increase competition, allow market forces to operate, gain 'Industry' status

The Indian real estate sector is a key growth driver of the country’s economy. The positive outlook of Indian Government is the key factor behind the sudden rise of the Indian Real Estate sector - the second largest employer after agriculture, in India.

The contribution of the residential segment alone to India’s GDP is around 5 to 6 per cent and to accelerate the overall GDP, it would be imperative to grant an Industry Stature to real estate and help it to adapt professional practices.

One of the most important factors, which has been discussed across all forums and which happens to be the bottleneck in the growth of real estate industry, is the complex and outdated procedure of seeking approvals. 

Currently, such inefficiencies ultimately are being passed on to the customers. Delay on this account also majorly affects the demand-supply of housing units. Hence, there is a need for a uniform approval process.

In any project management scenario -Time is money and any project delay adds to the cost of the project which is ultimately passed on to the customer’s.

The bottlenecks may be overcome by careful mapping of the regulatory jurisdictions, authorities and laws and to remove duplication of efforts and abrogate rudimentary processes. Whilst a unified regulatory framework would be of a major help, re-engineering of the processes and mapping of various regulatory authorities will help real estate development to catch up with the economic development of the nation.

The Indian real estate market is in growing stage and dominated by a large number of small players, with very few organised plyers i.e. corporates and large players with national footprint. The Indian real estate market, as compared to the other more developed Asian and Western real estate markets, is characterised by smaller size, lower availability of good quality space and higher prices.

Supply of urban land is largely controlled by state-owned development bodies like the Development Authorities i.e. DDA and Housing Boards leaving very limited developed space for competitive supply lines. The LARR 2013 would further pose challenges for land acquisition process and would make projects unviable.

There is a huge opportunity for leveraging the large portfolios of un-utilised and underutilized real estate assets of various government agencies. Inviting private participation in housing under Public-Private Partnerships (PPP) would attract investment in this sector. 

A conscious effort on the part of these agencies, coupled with policy initiatives, can unlock the value of these non-performing assets while revenues generated from such initiatives can be utilised for the development of infrastructure.