How realty can contribute to the economy’s vision
Union Budget 2020-21’s almost pointed negligence of the real estate sector was most puzzling - especially sincethepreviousbudget had envisaged an ambitious blueprint for the country’s economic future. For realizing the vision of making India a USD 5 trillion economy by FY 2024-25, the development and growth of its real estate sector is imperative. Across developing and developed economies, real estate andeconomicgrowthareinseparable concepts.
Real estate is a key driver of economic growth, and by laying the groundwork of making it moreorganisedandtransparent, the government has already madeitamoresecureandattractiveinvestmentenvironment. The fact that the latest budgetgaveno more than a cursory glance at real estate is a missed opportunity to build further on this groundwork. To propel the Indian economy into the top league of global economies, the growth engine of real estate cannot be ignored.
INR 100 lakh crores for infrastructure investments to improve transport efficiency over the next five years. Multimodal infrastructure development such as roads, rail and metroimproveslivingconditions andspursdemandforresidential, commercial, retail and warehousing real estate.
Major reforms such as GST, RERA, Insolvency and Bankruptcy Code and Benami Property Transaction Act have had a lasting impact on the real estate sector. Despite the initial churn and pain, they have increased financial discipline andahealthier ecosystem. By instilling renewedconfidenceinhomebuyers anddomesticinvestors, these l andmark reforms have improved the perception for India as a global hub for investments.
As per ANAROCK data, private equity investments in India’s real estate sector clocked in at over USD 5 billion in 2019, of whichcommercialsegmentcomprised the lion’s share at over USD3.3bn, followed byretail sector withUSD970mnandresidential of USD395mn. Alargechunk of these investments came from foreign private equity funds like Blackstone, Hines, Ascendasand Brookefield.
However, housingremainsan unpalatableinvestmentcategory for smaller domestic investors. The Union Budget was an ideal platformfromwhichtoannounce initiatives to boost private investor participation. Currently, India’s housing sector is riding almost exclusively on end-user sales, which are not enough to revive residential real estate and its related benefits of furthering the Housing for All by 2022 goal and generating increased employment.
As the second- l argest employer and a major contributor to the country’s GDP, the real estate industry is one of the Indian economy’s strongest pillars. It cannotremainaneglected stepchild - it must become the apple of the government’s eye. A convincing revival of the Indian real estate sector is essential for the economy to move out of its current slow phase and achieve the mammoth targets - Housing for All by2022andmakingIndiaa $5trillion economybyFY2024-25.