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Demographic statistics suggest that India can be a leading destination for real estate business globally. The country has an urban population equivalent to the total population of the United State of America and United Kingdom, and about 10 million people moving into cities annually. The strong growth, coupled with 18.8 million housing shortage, requires no mathematical genius to understand the potential.

It is estimated that the size of the real estate sector may increase five-fold to reach USD676 billion by 2025. This phenomenal growth is expected to provide strong opportunities to global real estate stakeholders as significant technical and financial support lacks in India. Specialist support is required in various real estate support sectors such as of architects, EPC contractors, quality material suppliers, project management consultants, and facilities management service providers.

To promote growth in housing and urban infrastructure stock, and attract foreign investment, the Government of India has taken commendable steps and is finalizing several other landmark reforms. Prominent reforms are opening up the retail sector to global investors, a new land acquisition law has replaced the century old legislation (Land Acquisition Resettlement and Rehabilitation Act, 2013), streamlined the approval mechanism, a real estate regulator is to be appointed in each state (Real Estate Development and Regulation Bill, 2013), facilitated the setting up of Real Estate Investment Trusts (REITs), allowed external commercial borrowings, and relaxed FDI norms in real estate and agriculture sector. In the long-run, we are hopeful that these legislations would help in improving the overall business environment in INDIA.

The Indian real estate sector has been a major beneficiary of the strong economic growth witnessed in India since the year 2000. The growth in the sector, supported by series of reforms, has not only resulted in significant residential and commercial real estate, but also complemented the development of physical and social infrastructure of the country.

The residential segment which contributes about 80 per cent to the real estate sector is expected to grow significantly over the next few decades. It is estimated that Indian cities need to develop at-least two million houses annually for the growing population.3 The actual number could be much higher as it does not include push in demand from re-development and shrinking size of households. Further, there was a housing shortage of about 18.7 million in 2012.4 Thus, India needs to develop almost 45-50 million housing units by 2028.

The commercial real estate market comprises of office, retail and industrial segments. It is primarily dependent on growth in services (IT/ITeS and BFSI) and industrial (logistics, warehouse, and manufacturing) sectors of the economy.

A major driver for real estate could be the awarding of new banking licenses by the Reserve Bank of India. It is expected that awarding of five new banking licenses would create demand for about 4.5-5 million sq feet of office space in a short term.

Conclusion

Urbanisation is a trend which probably cannot be reversed or avoided in India. Having realized the potential and need for an adequate urban development strategy, the Government has taken significant steps by allocating significant amount of funds towards urban infrastructure, the fruits of which are now visible.

The constant focus on development is expected to support a strong growth for the real estate sector. As a growth enabler, it is essential to develop the real estate sector to support the growth of over 300 other sectors and employment.

However, a key challenge is the lack of technology and funding, where a massive gap exists. Realising the challenge at hand, several key reforms have been introduced recently and many more are lined up to improve global inflow of funds and promote growth of the sector.