India's Real Estate Boom: Can Urbanisation Drive Growth Amidst Challenges?
India's real estate market saw a 33% year-on-year growth in 2023, with sales reaching 4.1 lakh units across major cities. But can the sector sustain this momentum?
India Real EstateUrbanisationHousing DemandStalled ProjectsAffordable HousingReal EstateAug 04, 2024
The Economic Survey paints a picture of a thriving housing sector. With nearly half of India's population projected to live in cities by 2050, the need for affordable and sustainable housing solutions is paramount. This demand is reflected in record-breaking sales of 4.1 lakh units in 2023 across the top eight cities, representing a 33% year-on-year growth. New housing supply is also at an all-time high, with 5.2 lakh units launched in 2023, exceeding the previous year's figure of 4.3 lakh units.
Several government initiatives have contributed to this positive trend. Schemes like Pradhan Mantri Awas Yojana-Urban (PMAY-U), which has sanctioned over 1.2 crore houses for urban beneficiaries, have helped make housing more accessible, particularly for lower-income groups. Policy reforms such as the Real Estate (Regulation and Development) Act and the Insolvency and Bankruptcy Code have increased transparency and investor confidence in the market. Furthermore, housing loans as a percentage of GDP have nearly doubled, rising from 6.6% in FY12 to 11.2% in FY24, reflecting the growing demand for housing finance.
Despite these positive developments, the issue of stalled real estate projects remains a significant hurdle. These projects, involving over 4 lakh stressed units and a staggering INR 4.1 lakh crore, create uncertainty for both investors and potential homeowners. The Ministry of Housing and Urban Affairs (MoHUA) is actively seeking solutions to revive these projects. Recommendations include mandatory project registration with RERA (Real Estate Regulation and Development Act), exploring financing options, and utilising the Insolvency and Bankruptcy Code (IBC) as a last resort.
India's real estate market holds immense potential. The housing loan market itself is expected to continue growing at a Compound Annual Growth Rate (CAGR) of 13-15%, reaching INR 42 lakh crore to INR 44 lakh crore by FY26. By addressing the challenge of stalled projects and promoting sustainable and affordable housing development, the government can create a robust and thriving sector that meets the needs of a growing urban population.
About Pradhan Mantri Awas Yojana-Urban (PMAY-U) PMAY-U is a flagship scheme of the Government of India aimed at providing affordable housing to urban beneficiaries. Launched in 2015, the scheme has sanctioned over 1.2 crore houses for urban beneficiaries.
About Ministry of Housing and Urban Affairs (MoHUA) MoHUA is the nodal ministry responsible for planning, execution, and monitoring of various schemes and programmes related to urban development, housing, and urban poverty alleviation in India.
Frequently Asked Questions
What is the current state of India's real estate market?
India's real estate market is experiencing a welcome rise, driven by rapid urbanisation and a growing demand for housing.
What is the impact of stalled projects on the real estate market?
Stalled projects create uncertainty for both investors and potential homeowners, and are a significant hurdle for the sector.
What government initiatives have contributed to the positive trend in the real estate market?
Schemes like Pradhan Mantri Awas Yojana-Urban (PMAY-U) and policy reforms such as the Real Estate (Regulation and Development) Act have increased transparency and investor confidence in the market.
What is the expected growth rate of the housing loan market in India?
The housing loan market is expected to continue growing at a Compound Annual Growth Rate (CAGR) of 13-15%, reaching INR 42 lakh crore to INR 44 lakh crore by FY26.
What is the role of the Ministry of Housing and Urban Affairs (MoHUA) in addressing the challenge of stalled projects?
MoHUA is actively seeking solutions to revive stalled projects, including mandatory project registration with RERA, exploring financing options, and utilising the Insolvency and Bankruptcy Code (IBC) as a last resort.
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