The slew of reforms introduced in the Indian Real Estate sector have helped the market move towards improved transparency and are therefore attracting more investors.
With RERA (Real Estate Regulation and Development Act) 2016, GST (Goods and Service Tax), insolvency and bankruptcy law, all of these reforms, the Indian economy is getting more sophisticated, and an easier place to do business. With the added sophistication and the added “Ease of Doing Business”, all of a sudden risk return moves into India’s favour.
Driven by the investment appetite for Real Estate, private equity flow into Indian Real Estate sector has been strengthening further mainly on account of foreign funds’ direct exposure and platform alliances. There is an abundance of opportunity in the domestic market here in India. There are a lot of demographic and economic tailwinds for India that don’t necessarily exist in other markets.
Affordable housing continues to perform better in the backdrop of the government’s objective of Housing for All by 2022. The market is coming to terms with the changes in business models of the Developers. The capital infusions have become much more capital-heavy, while on the other hand, the regulation has completely changed the landscape.
India is standing among the top 10 key markets in the global scheme of things and the scenario has changed completely in favour of the country over the past few years.
MARKET SIZE
Real estate sector in India is expected to reach a market size of US$ 1 trillion by 2030 from US$ 120 billion in 2017 and contribute 13 per cent of the country’s GDP by 2025.
TECHNOLOGY & INNOVATION
From innovative construction technology which helps create more affordable housing, to technology led workspaces where space usage is measured by sensors, technology has made its way. Going ahead, technology led innovations are further expected to influence the current functioning of businesses – whether it is a real estate agent looking to sell homes, a landlord looking for tenants, or a prospective homeowner looking for his first house. However, the synergy between technology and physical interface will continue in future as well.
Smart Cities Mission
The Smart City Project, where there is a plan to build 100 smart cities, is a prime opportunity for the real estate companies in India. In the imagination of any city dweller in India, the picture of a smart city contains a wish list of infrastructure and services that describes his or her level of aspiration. To provide for the aspirations and needs of the citizens, urban planners ideally aim at developing the entire urban eco-system, which is represented by the four pillars of comprehensive development-institutional, physical, social and economic infrastructure. This can be a long term goal and cities can work towards developing such comprehensive infrastructure incrementally, adding on layers of ‘smartness’.
In the approach of the Smart Cities Mission, the objective is to promote cities that provide core infrastructure and give a decent quality of life to its citizens, a clean and sustainable environment and application of ‘Smart’ Solutions. The focus is on sustainable and inclusive development and the idea is to look at compact areas, create a replicable model which will act like a light house to other aspiring cities. It is meant to set examples that can be replicated both within and outside the Smart City, catalysing the creation of similar Smart Cities in various regions and parts of the country.
The core infrastructure elements in a Smart City would include:
E-Governance and Citizen Services
- Public Information, Grievance Redressal
- Electronic Service Delivery
- Citizen Engagement
- Citizens – City’s Eyes and Ears
- Video Crime Monitoring
Waste Management
- Waste to Energy & Fuel
- Waste to Compost
- Waste Water to be treated
- Recycling and reduction of C&D Waste
Water Management
- Smart Meters & Management
- Leakage Identification, Preventive Maintenance
- Water Quality Monitoring
Energy Management
- Smart Meters & Management
- Renewable Sources of Energy
- Energy Efficient & Green Buildings
Urban Mobility
- Smart Parking
- Intelligent Traffic Management
- Integrated Multi-Modal Transport
Others
- Tele-Medicine & Tele Education
- Incubation / Trade Facilitation Centres
- Skill Development Centres
The purpose of the Smart Cities Mission is to drive economic growth and improve the quality of life of people by enabling local area development and harnessing technology, especially technology that leads to Smart outcomes. Area based development will transform existing areas (retrofit and redevelop), including slums, into better planned ones, thereby improving liveability of the whole City. New areas (greenfield) will be developed around cities in order to accommodate the expanding population in urban areas. Application of Smart Solutions will enable cities to use technology, information and data to improve infrastructure and services. Comprehensive development in this way will improve quality of life, create employment and enhance incomes for all, especially the poor and the disadvantaged, leading to inclusive Cities.
| Total Winning Proposals | 100 |
| Total Urban Population impacted | 9,96,30,069 |
| Total Cost of Projects (Incl. other cost – O&M, contingency, etc.) |
2,05,018 (₹ Cr.) |
| Total Area based Development Cost | 1,64,204 (₹ Cr.) |
| Total Pan City Solution Cost | 38,914 (₹ Cr.) |
Ease of Doing Business:
India has improved its rank from 181 to 52nd position in granting of construction permits in World Bank’s Doing Business 2019 report.
The Municipal Corporation of Greater Mumbai (MCGM) has implemented AutoDCR, an innovative e-governance platform for automation of the building plan scrutiny and approval. It is one of the widely implemented architect engineering solution for e-governance of the building plans. It is an online building plan approval system to keep track of the approval workflow with associated documents scrutiny including site visits.
Now the citizens can check the status of the approvals of the building plans online on the website https://autodcr.mcgm.gov.in/bpamsclient2/Login.aspx
The search is very simple and does not require user registration. The status of approvals including the plans and other documents can be seen by just putting in the details of the locality OR the name of the Developer / Architect OR name of the Applicant.
Reforms undertaken in granting construction permits in Mumbai
- All proposals are accepted online and Plans are auto scrutinized.
- Digitally signed approvals / certificates are issued.
- Total time for getting construction permits reduced up to 60 days against 164 days earlier.
- Entire approval process is in public domain and paperless.
- Combined fee calculation and acceptance at one location
- Third party certification accepted for certain NOCs.
- Architects and Developers are intimated online through E-mail and SMS at every stage of approvals.
- Uploading of Video clips / photos are mandatory to observe status of construction work.
- Improved efficiency due to uniform simplified, standardized and time bound approval process.
Goods & Service Tax (GST):
The government lowered a key goods-and-services rate on affordable homes to 1 percent from 8 percent, without input tax credit (ITC). The GST on projects under construction, which are not under the affordable housing segment, was reduced to 5 percent from 12 percent.
The new rates, which have come into force from April 1, 2019 will provide a significant boost in fuelling residential sales. While the market has been aligning itself to meet increasing demand for affordable housing, a reduction in GST will provide the much-needed incentive for investors.
In a further measure to coax growth in India, the government has changed the definition of affordable housing to increase the sector’s supply and scope. “Affordable housing will now consist of a residential unit of a carpet area of up to 90 square-metres in non-metros, and 60 square metres in metros. Both the categories will have a price tag up to INR 4.5 million, according to a statement by the government.
The government has already shown commitment to the sector and has been focussing on the gap within the segment from past few years. In February’s interim Union Budget, it announced a years’ extension on the approval time to claim 100 percent tax deduction on profits from affordable housing projects under Section 80-IBA.
Real Estate (Regulation and Development) Act, 2016 (RERA):
The Real Estate (Regulation and Development) Act, 2016 is an Act of the Parliament of India which seeks to protect home-buyers as well as help boost investments in the real estate industry. The Act establishes Real Estate Regulatory Authority (RERA) in each state for regulation of the real estate sector and also acts as an adjudicating body for speedy dispute redressal. The bill was passed by the Rajya Sabha on 10 March 2016 and by the Lok Sabha on 15 March 2016. The Act came into force on 1st May 2016 with 59 of 92 sections notified. Remaining provisions came into force on 1st May 2017.
Under this Act, Government of Maharashtra established Maharashtra Real Estate Regulatory Authority (MahaRERA), vide Notification No. 23 dated 8 March 2017, for regulation and promotion of real estate sector in the State of Maharashtra and promulgated the “Maharashtra Real Estate (Regulation and Development)(Registration of Real Estate Projects, Registration of Real Estate Agents, Rates of Interest and Disclosures on Website) Rules, 2017.”
The citizens can check the details of the Projects, Promoter (Developer), amenities and timelines of the project on the website https://maharerait.mahaonline.gov.in/
Pradhan Mantri Awas Yojana (Urban)
(Around 2 million houses in 390 cities up to 2022)
Concession in Interest:
- Concession in interest to homeless person or person having kutcha house
- 6.5% interest out of total interest will be paid by the government for home loan up to ₹ 6,00,000/-.
- Concession in interest up to ₹ 2,67,000/-.
Construction of affordable houses through private partnership:
- The houses built by MHADA (Maharashtra Housing and Area Development Authority) or Maharashtra Housing Development Corporation are cheaper than the markets.
- Grant of ₹ 2,50,000/-.
For Economically Weaker Sections:
- The person from Economically Weaker Sections gets grant of ₹ 2,50,000/- to build a house by him.
ROAD AHEAD
The Securities and Exchange Board of India (SEBI) has given its approval for the Real Estate Investment Trust (REIT) platform which will help in allowing all kinds of investors to invest in the Indian real estate market. It would create an opportunity worth Rs 1.25 trillion (US$ 19.65 billion) in the Indian market over the years. Responding to an increasingly well-informed consumer base and, bearing in mind the aspect of globalisation, Indian real estate developers have shifted gears and accepted fresh challenges. The most marked change has been the shift from family owned businesses to that of professionally managed ones. Real estate developers, in meeting the growing need for managing multiple projects across cities, are also investing in centralised processes to source material and organise manpower and hiring qualified professionals in areas like project management, architecture and engineering.
The growing flow of FDI into Indian real estate is encouraging increased transparency. Developers, in order to attract funding, have revamped their accounting and management systems to meet due diligence standards.
INVESTORS CONTACT
Registrar & Share Transfer Agent
Link Intime India Private Limited
C-101, 247 Park,
LBS Marg, Vikhroli (West),
Mumbai- 400083
Tel. No. +91 22 49186270, Fax: +91 22 49186060.
Email: rnt.helpdesk@linkintime.co.in
Disclaimer: This information has been collected through secondary research and Horizon Promoters India Ltd. is not responsible for any errors in the same.
