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Investing in Real estate market in India

The industry was aware of the effects of the ongoing NBFC crisis that resulted in a squeeze in liquidity and slow sales recovery. The successful launch of India’s first Real Estate Investment Trust (REIT) on the other hand opened up new investment opportunities while multiple governmental operations helped the housing industry.

Branded developers took root with some listed players’ exceptionally good sales performance and a corresponding increase in revenue.

In recent times the Indian real estate sector has seen strong growth as demand for offices and residential space has increased. In 2019 real estate rose to Rs 43,780 crore in investments (US$ 6.26 billion). In 2019, the retail segment attracted around US$1 billion of PE (Private Equity) funding. In the quarter ended March 2020, the institutional investment in the sector amounted to US$ 712 million. From international PE between 2015 and Q3 2019, real estate attracted around US$ 14 billion.

In FY20, exportations of the SEZs reached Rs. 7.96 (USD 113.0 billion) and in FY19 they grew by Rs. 7.1 (USD 100.3 billion) to Rs. 13.6 percent.

Construction is the third-largest sector in terms of FDI inflows, according to data released by the Department for Promotion of Industry and Internal Trade Policy (DPI). Between April 2000 and September 2020, the sector’s FDI (including housing and construction work) stood at US$ 42.97 billion.

 

The following are some of the main investments and innovations in this sector:

The Godrej Group has entered the financial services industry with Godrej Housing Finance (GHF), with the aim of establishing a long-term and profitable retail financial services sector in India, with a balance sheet of Rs. 10,000 crore (US$ 1.35 billion) in the next three years.

Initiatives of the Government

The Government of India, in collaboration with the governments of the respective states, has launched a number of initiatives to promote growth in the field. The Smart City Project, which aims to create 100 smart cities, represents an excellent opportunity for real estate companies. Some of the other major government initiatives are listed below:

The Ministry of Housing and Urban Affairs (MoHUA) will open an affordable rental housing complex portal in October 2020.

The government declared the implementation of the Real Estate (Regulation & Development) Act, 2016 in the union territory of Jammu & Kashmir on October 27, 2020. This has made it possible for any Indian citizen to purchase non-agricultural land and property, as opposed to only local residents previously.

The Union Cabinet has approved the establishment of an Rs. 25,000 crore (US$ 3.58 billion) alternative investment fund to resurrect approximately 1,600 stalled housing projects across the country (AIF).

1.12 crore houses have been approved in urban areas under the Pradhan Mantri Awas yojana (Urban) (PMAY (U), generating 1.20 crore jobs.

The government has established an Affordable Housing Fund (AHF) in the National Housing Bank (NHB) with an initial corpus of Rs. 10,000 crore (US$ 1.43 billion) to use priority sector lending shortfalls of banks/financial institutions for HFC microfinance.

 

The Path Ahead

The Securities and Exchange Board of India (SEBI) has approved the Real Estate Investment Trust (REIT) platform, allowing all types of investors to invest in the Indian real estate market. In the coming years, it will generate a Rs. 1.25 trillion (US$ 19.65 billion) potential in the Indian market. Responding to an increasingly educated customer base and keeping globalization in mind, Indian real estate developers have changed gears and embraced new challenges.

The most noticeable change has been the transition from family-owned to professionally run companies.

Increased transparency is being encouraged by the increasing influx of FDI into Indian real estate. To raise investment, developers have updated their accounting and management processes to meet due diligence requirements. In the next two years, Indian real estate is projected to attract significant FDI.

 

Conclusion:

Experts predicted that the market would fully recover in 2021, as inquiries, site visits, and sales had begun to approach pre-COVID levels in most cities. The revival of Coronavirus in a more lethal form by March 2021, on the other hand, has caused much more concern than last year. With partial lockdowns in several cities, including Mumbai, Pune, and Delhi NCR, and people struggling for healthcare, the real estate sector has taken another hit. Buyers have withdrawn from site visits once more, slowing down property transactions. But stable prices offer a good investment opportunity. According to industry experts and players like Sukhwani Constructions, the recovery will be heavily soon and faster, once we fight the second Corona wave with a positive note.