Positive Outlook for Indian Real Estate: Economic Survey
Urbanization and rising housing demand drive the sector's growth, but stalled projects remain a challenge.
Real EstateEconomic SurveyUrbanizationHousing DemandStalled ProjectsReal Estate MaharashtraJul 22, 2024
The survey noted that half of India's population is projected to dwell in urban regions by 2050 compared to 31 per cent in 2011, stressing the need to adapt strategies and policies to meet the rising demand for housing and offer viable, cost-effective, and sustainable solutions. However, the legacy stalled real estate projects remain a challenge, with approximately 4.1 lakh stressed dwelling units, involving Rs 4.1 lakh crore, affected.
The survey highlighted that the real estate sector has witnessed a robust recovery after two challenging years of pandemic-induced lockdowns and economic instability. Factors contributing to the sector's growth include rapid urbanization, rising income levels, the emergence of nuclear families, new entrants in the market, and improved financial options for developers and homebuyers.
Quoting housing brokerage firm PropTiger data, the survey highlighted that residential real estate sales in the 2023 calendar year were at their highest since 2013, witnessing a 33 per cent annual growth, with a total sale of 4.1 lakh units in the top eight cities. The new supply witnessed an all-time high, with 5.2 lakh units launched in 2023 against 4.3 lakh units a year ago.
The rising demand for housing loans reflects the underlying demand for real estate. Housing loans as a percentage of GDP increased from FY12 to FY24. The survey listed various factors that have led to the growth in the housing sector, including the Pradhan Mantri Awas Yojana-Urban (PMAY-U), policy reforms like the Goods and Services Tax, Real Estate (Regulation and Development) Act, and the Insolvency and Bankruptcy Code.
Initiatives like the Affordable Housing Fund and Special Window for Affordable and Mid-Income Housing (SWAMIH) Investment Fund have supported affordable housing projects. The digitisation of land records is poised to improve transparency in land transactions, diminish property ownership conflicts, and enhance the efficiency of land management.
Implementing a single-window clearance system for construction approvals will also accelerate construction processes, minimising delays and uncertainties. The survey believes that the demand for housing is expected to be driven by affordability and increased access to credit. As of March 2024, the shares of Southern, Western and Northern states in the individual housing loans outstanding are 35.4 per cent, 31.2 per cent and 26.2 per cent, respectively.
The Eastern States at 6.9 per cent and the eight North-eastern and Hilly states combining to 0.95 per cent share present an opportunity for undertaking initiatives for improving penetration. Sustainability and technology have emerged as significant disrupters for the real estate sector, influencing green construction practices and energy-efficient designs while revolutionising smart homes and data-driven insights.
Frequently Asked Questions
What is the growth driver for the real estate sector in India?
Rapid urbanization and rising housing demand are the growth drivers for the real estate sector in India.
What is the challenge facing the real estate sector in India?
Legacy stalled real estate projects are a challenge facing the real estate sector in India, with approximately 4.1 lakh stressed dwelling units, involving Rs 4.1 lakh crore, affected.
What is the impact of the COVID pandemic on the real estate sector?
The COVID pandemic has shifted homebuyers' preferences toward larger, sustainable spaces with additional amenities, driven by remote and hybrid working trends.
What is the role of Housing Finance Companies (HFCs) in the housing sector?
HFCs have significantly contributed to the landscape over the years, playing a complementary role with banks in providing housing credit to the bottom of the pyramid.
What are the initiatives that have supported affordable housing projects in India?
Initiatives like the Affordable Housing Fund, Special Window for Affordable and Mid-Income Housing (SWAMIH) Investment Fund, and Pradhan Mantri Awas Yojana-Urban (PMAY-U) have supported affordable housing projects in India.
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