Reforms boost Indian real estate in 2012
Real estate reforms have been a constant topic of debate in India for the last few years. Analysts have conceded in the recent past that astronomical prices have hurt the real estate industry and that the prospects of revival look gloomy unless government interferes with reform policies. High property price, decreasing demand and delaying projects have marred the growth of Indian realty. Finally, few reforms have been introduced in 2012 which are set to impact Indian real estate sector to a considerable extent. There are few perceived factors that have boosted the growth of realty sector in India in 2012.
Affordable housing sector
Affordable housing in India have remained under dark clouds due to discrepancy between demand and supply of affordable units. The fund starved realty firms have finally been given a push to meet the untapped demand for affordable housing as external commercial borrowings were made available for Indian real estate sector. Realty firms can now borrow up to USD one billion from foreign sources for low-cost housing projects.
Ministry of Housing and Urban Poverty Alleviation (MHUPA) estimates the urban housing shortage in the country to be 24.71 million. Government has tried to boost the affordable housing in India further and to bridge the demand supply gap by extending one percent interest incentive scheme for low-cost housing by one more year.
The government has announced plans for developing housing units for slum dwellers in 250 cities and has resolved to make India slum free by 2020. It is an encouraging sign for housing industry in the country as the residential sector is set to get a boost from this. Government has also relaxed norms of transfer of lands to public private partnership (PPP) projects.
Home loan rates
The housing sector is bogged down by high interest rates added to constant increase in home prices. Home loan seekers have received a big relief when Reserve Bank of India (RBI) increased the home loan limit for economically weaker sections to Rs.1 million. RBI also introduced a credit risk guarantee scheme for low-income home loans below Rs.500,000. National Housing Bank (NHB) scrapped the pre-payment charges, bringing in further relief for home loan seekers across the country.
FDI in retail sector
Government’s decision to allow 100 percent foreign direct investment (FDI) in retail sector has been another boost for real estate in India. It would prove vital to improve the market sentiment and attract the foreign investors to invest in India. As the retail sector picks up, residential demand is expected to rise accordingly across the country. Mall development suffered a backlash of downward journey of Indian economy. As both residential and commercial demand suffered a fall in 2012, foreign investment is deemed as the possible catalyst to revive the commercial and residential realty.
Right to property
The Supreme Court of India termed the ‘right to property’ a human right, which marks a significant milestone in the real estate scenario. The apex court has made it mandatory for the government to compensate adequately and on a timely basis for anyone from whom the land has been taken. The proposed Land Acquisition Bill is another related development to safeguard land owner’s right, which came to limelight after the farmers’ agitation in Noida. However, the long cherished wish to grant industry status to real estate sector still remains an illusion.
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Indian real estate in 2013: A forecast
