The real estate and construction sector is an engine of economic growth for India, as it contributes the third highest share (about 7-8 percent) to the Indian economy. It is also the third largest employer in 1 India, with an employment base estimated at 52 million. Further, it accounts for the second highest inflows of Foreign Direct Investment (FDI) into India, with cumulative inflows of USD 24.3 billion during 2000-16 period.
Though the commercial asset classes have been witnessing healthy traction, the residential asset class has been affected by numerous challenges, such as demand-supply mismatch across segments, schedule and cost overruns, inadequate liquidity and trust deficit between home buyers and developers. Additionally, the real estate sector has limited access to long-term funding and taxation and fees structures are either complicated or irrational, leading to higher project cost impacting the end-users/buyers. Further, it is estimated that India would require about USD 2 trillion till 2022 in funding to meet the development of housing shortage of 110 million units by 2022. Additionally, the supportive urban infrastructure, including utility services, is inadequate, which fails to meet even the basic standards in certain cities. Hence, another USD 1.0 - 1.5 trillion would be required by 2030 to upgrade and create the supportive urban 2 infrastructure.
We believe that the sector has a potential to grow at a considerably higher pace, as the total urban housing demand is estimated to be about 3 170 million units by 2030. Further, mega programmes such as 100 smart cities, 500 AMRUT cities, industrial and freight corridors, to name a few, launched by the central government, would provide ample opportunities for growth. But for the sector to grow at a higher pace, the prevalent challenges have to be overcome first.
The government has undertaken host of policy reforms and initiatives to address some of these challenges to a certain extent. Some of the key reforms undertaken over the past two years include:
The government has set the stage for the next era of transformation and growth. It is expected that the policy reforms highlighted above, would lead to higher accountability, transparency and increase efficiency in the sector. With these reforms, the government has opened up plethora of opportunities for growth in the real estate and construction sector. This would likely result in attracting higher interest from private as well as public institutions for considering Indian real estate a safe and an attractive investment avenue of growth.
With this agenda, NAREDCO has decided to organize a convention to deliberate on the strategies for exploiting the potential of real estate to achieve higher economic growth and prosperity of the nation. The convention would provide a common platform to all stakeholders, ranging from — policymakers to real estate developers, public and private institutional investors, contractors, architects and consultants and stakeholders from allied industries; to deliberate the challenges and evolve strategies to overcome these challenges, to remain competitive.