Real estate in partnership with infrastructure has driven GDP growth over the years; and it has the potential to help India achieve the goal of evolving into a $5 trillion economy.
Over the years, we have seen how in some aspects small tweaks result in major advantages. Granting of industry status is one such aspect. To be fair, affordable housing has been granted this; other segments in real estate are also waiting for a ‘change in status’ — and with good reason.
The inclusion of real estate among those sectors granted ‘industry status’ will directly reflect in terms of availability of low-cost credit.
Low-cost funding has been the single largest challenge for real estate. Over the years, the challenge has evolved and grown, and now we have ‘last mile funding’ for on-going projects as a separate challenge in itself.
The biggest argument for granting industry status is the low rate of NPAs (non-performing assets) in real estate: it’s just 2 per cent. If industry status is granted for real estate the GDP will grow, as will jobs and business opportunities; the 270-plus ancillary industries will grow; and India will see housing for all move from being a dream and an initiative to becoming a reality.
Ease of doing business: The second aspect which restricts real estate from growing to its full potential and needs to be sorted out is ‘ease of doing business’. It has been steadily improving over the past few years, if one goes by the World Bank reports; but here too, Indian real estate faces the ‘halfway there’ situation.
Measured in terms of time taken to grant permissions or electricity connection, things have definitely improved, but if India has to become a $5 trillion economy, there is still a long way to go.
Digitisation: Linked to this is digitisation of land records. From land acquisition to title clearance, from zoning and user status changes to quantum of FSI that can be granted, these are a set of challenges which digitisation will help solve.
These are among the largest impediments that prevent real estate from playing its role as an accelerator of GDP growth. As real estate moves ahead in the new regulatory environment under RERA (Real Estate Regulatory Authority), it is time to also bring in transparency and accountability to these bureaucratic processes where red tape usually causes delays.
Compliance is not something which should only be viewed as a burden, it should be inbuilt into the system. It is the delays caused by these aspects, which enhance the interest cost burden on projects and result in cost overruns.
Sustainable real estate: Sustainable real estate development is the future. This means real estate development needs to be done in a way that causes least possible damage to the environment.
Natural resources need to be conserved. Here, real estate development has to factor in aspects like sewage treatment, rainwater harvesting, turning garbage into compost and using it to fertilise green and landscaped spaces, and harness solar and wind energy to power common utilities — it has to be a holistic way of living.
Inclusive growth: The future will be all about inclusivity and diversity. So equal opportunities, encouraging women in leadership roles, pay parity, and equitable and sustainable prosperity will help unlock the rich, untapped demographic. The future of real estate should be its evolution into a safe and conducive industry for people to work, grow and lead.
Also, the future of Indian real estate will be eco-friendly, one where the focus will shift from just creating ‘customer delight’ to a situation where the customer will also be a stakeholder.
The writer is National President, NAREDCO