Realty sec­tor will gen­er­ate 75 mil­lion jobs by 2030, says KPMG re­port

Ex­pected to grow to be the third largest glob­ally by 2030, con­tribut­ing over 15% to In­dian GDP. Size of con­struc­tion mar­ket ex­pected to grow to more than $1 tril­lion

HT Estates - - HTESTATES - HT Es­tates Cor­re­spon­dent Ab­hishek Behl

The real es­tate and con­struc­tion sec­tor in In­dia is ex­pected to grow to be the third largest glob­ally by 2030, con­tribut­ing over 15% to the In­dian GDP, emerg­ing as the largest em­ployer in In­dia pro­vid­ing em­ploy­ment op­por­tu­ni­ties to over 75 mil­lion peo­ple, a re­port by KPMG has said.

The size of the con­struc­tion mar­ket is also ex­pected to grow to more than $1 tril­lion by 2030.

KPMG In­dia and the Na­tional Re a l E s t at e D eve l o p m e n t Coun­cil (Naredco) at a re­cent event in Cap­i­tal Delhi re­leased a back­ground pa­per giv­ing an over­view of pro­grammes launched by the Cen­tral gov­ern­ment to ad­dress the key chal­lenges in ur­ban­i­sa­tion and the real es­tate sec­tor.

Strict and pro­longed reg­u­la­tory pro­cesses lead­ing to de­lays in project com­ple­tion is one of the big­gest hur­dles be­fore the sec­tor. Also, there are nu­mer­ous land-re­lated is­sues such as lim­ited fund­ing from banks, and lim­ited long- term fund­ing which ham­per the sec­tor’s growth. Lack of man­power cou­pled with con­ven­tional us­age of tech­nol­ogy and lack of sta­ble and pre­dic­tive tax regime, are also some of the core af­flic­tions of the sec­tor.

Ac­cord­ing t o t he re­port, nearly 110 mil­lion houses would be re­quired by 2022 in ur­ban as well as ru­ral In­dia to pro­vide hous­ing to all cit­i­zens. This in­cludes the cur­rent short­age of over 60 mil­lion houses, out of which around 20 mil­lion ex­ist in ur­ban ar­eas. Ac­com­mo­dat­ing the In­dia’s ur­ban pop­u­la­tion, which is fore­cast to in­crease about 40% to over 580 mil­lion by 2030 from 420 mil­lion in 2015, will be a prob­lem.

Keep­ing this in mind the gov­ern­ment had launched sev­eral large pro­grammes (such as Smart Cities, Hous­ing for All, AMRUT, HRIDAY etc.) along with pol­icy sup­port (Real Es­tate Act, REITs, GST) to ac­com­mo­date such a vast pop­u­la­tion base.

Projects re­quired big in­vest­ments and also had huge rev­enue earn­ing po­ten­tial. The ‘ Hous­ing for All’ ini­tia­tive re­quired an i nvestment of $ 2 tril­lion by 2022. Also, the po­ten­tial value of com­mer­cial of­fice as­sets which could come un­der REIT (real es­tate in­vest­ment trust) was more than 400 mil­lion sq ft, worth around $50 bil­lion. In­fras­truc­ture projects in the pipe­line in­cluded 432 projects worth ₹ 6.5 tril­lion for roads; more than 400 projects worth ₹ 6 tril­lion in rail­ways; 70 projects worth ₹ 670 bil­lion for the de­vel­op­ment of air­ports and 75 projects worth ₹ 551 bil­lion for the ports.

“With ev­ery sixth per­son get­ting ur­banised glob­ally be­ing an In­dian, the real es­tate and con­struc­tion sec­tor holds sig­nif­i­cant op­por­tu­nity for both global and do­mes­tic com­pa­nies en­gaged across the value chain (de­sign, de­vel­op­ment, con­struc­tion, fi­nance etc),” said Neeraj Bansal, part­ner and head, build­ing, con­struc­tion and real es­tate sec­tor, KPMG In­dia.

Se­nior gov­ern­ment of­fi­cers who spoke at the Naredco con­fer­ence called upon de­vel­op­ers to live up to their prom­ises, and en­sure con­sumers do not suf­fer end­less de­lays in pos­ses­sion.

“There is a huge re­spon­si­bil­ity on all of you to be equally re­spon­si­ble to en­sure that con­sumers don’t suf­fer. Con­sumers have suf­fered at the hands of many real es­tate com­pa­nies across In­dia. They promised houses, and did not de­liver in time,” NITI Aayog chief ex­ec­u­tive of­fi­cer Amitabh Kant said.

Ask­ing the in­dus­try to work with “self dis­ci­pline”, he said “if con­sumers suf­fer, the cred­i­bil­ity of in­dus­try goes and no­body will trust the in­dus­try in fu­ture. That is why, it is im­por­tant that we live up to our words... We en­sure that there is greater level of pro­fes­sion­al­ism,” he added.

Echo­ing the sen­ti­ment law min­is­ter Ravi Shankar Prasad said given that In­dia’s as­pi­ra­tions and ex­pec­ta­tions were chang­ing, not stick­ing to de­liv­ery time­lines would lead to “com­pli­ca­tions”.

“There­fore, the most im­port ant point I would l i ke t o high­light for your con­sid­er­a­tion is to re­claim the cred­i­bil­ity quo­tient of the seg­ment,” Prasad said and lauded the role of de­vel­op­ers who had done “very well” in meet­ing the ex­pec­ta­tion of the con­sumers, but said that a hand­ful of black sheep brought a bad name to the sec­tor. “There needs to be an hon­est in­tro­spec­tion,” he said.

In his ad­dress, Nitin Gad­kari, union min­is­ter for road trans­port and high­ways, urged de­vel­op­ers to cut con­struc­tion costs and avail dol­lar loans. He also an­nounced t hat pend­ing work on t he 18-km Dwarka Ex­press­way in the Na­tional Cap­i­tal Re­gion would start in the next three to four months.

“I nter­est cost i s high i n our coun­try. At one time, the rates were as low as 6.25%. The gov­ern­ment is tak­ing steps to lower the in­ter­est rates. But it will take time to reach that level,” Gad­kari said.

If all goes as planned by the Haryana Ur­ban De­vel­op­ment Au t h o r i t y ( H U DA ) , t h e Souther n Pe­riph­eral Road ( SPR), con­nect­ing Faridabad Road and Sohna Road to the Delhi Gurgaon Ex­press­way will be­come mo­torable by t he mid­dle of Se ptem­ber. Com­ple­tion of the 16-km, 150 me­tre wide road is likely to open up up­mar­ket real es­tate space from Golf Course road to the Delhi-Gurgaon Ex­press­way. SPR starts from the Farid­abadGur­gaon Road near Ghata, passes through Sohna Road at Vatika Chowk, and con­nects to the Delhi Gurgaon Ex­press­way near Kherki Daula. How­ever, as HUDA could not ac­quire a 300me­tre stretch, a part of the road has not been com­pleted. Draw of lots to pro­vide ac­com­mo­da­tion for peo­ple ousted from their homes was done at the HUDA of­fice in Gurgaon on Tues­day.

Once SPR be­comes op­er­a­tional, up­take in ab­sorp­tion of hun­dreds of res­i­den­tial and com­mer­cial prop­er­ties could be ex­pected in an area. This will def­i­nitely come as pos­i­tive news for the NCR mar­ket as a slow­down has im­pacted both sides of Na­tional High­way 8 be­cause of non-com­ple­tion of ma­jor roads, in­clud­ing the SPR and NPR.

H U DA a d m i n i s t r a t o r Yash­pal Yadav, who over­saw the draw of lots on Au­gust 16, said the au­thor­ity was plan­ning to make the road mo­torable by Septem­ber 16, and in the in­terim a 16-me­tre rev­enue road would be re­paired to en­able ve­hi­cles to cross the 300-me­tre stretch of Ram­bir ki Dhani. “We have asked the al­lot­tees to pay the earnest money within a week so that the al­lot­ment process can be com­pleted at the ear­li­est. The letters will be is­sued soon,” Yadav said.

The im­por­tance of this road can be gauged from the fact that large real es­tate projects by DLF, Tata, Ra­heja De­vel­op­ers, Ireo, Parsv­nath, BPTP, Vipul and Emaar MGF, and Unitech have come up along this road. Work on more than 25,000 units is nearly com­plete and many more projects have been launched. How­ever, lack of con­nec­tiv­ity, and heavy con­ges­tion on Sohna Road has put off many buy­ers.

The com­ple­tion of the 16-km long SPR was stuck be­cause HUDA could not ac­quire Ram­bir Ki Dhani, a small chunk of land with houses, whose own­ers had sought le­gal re­course, after HUDA sought to ac­quire their prop­er­ties. After much ef­fort, the ur­ban au­thor­ity has some­how con­vinced the own­ers to take al­ter­na­tive plots in Sec­tor 49 un­der the Re­lief and Re­ha­bil­i­ta­tion pol­icy of the gov­ern­ment, which will pave the way for com­plet­ing the road, with the caveat that no one seeks ju­di­cial re­course again.

“There are some al­lot­tees who want HUDA to give the plots free of cost or un­der the Fi­nal Terms of Set­tle­ment like the NPR but this is not pos­si­ble. This case comes un­der R&R pol­icy whereas the NPR is­sue was de­cided by the court as a one off case,” said Yadav.

AB­HI­NAV SAHA

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