Reforms, initiatives helping transform an industry plagued by problems

The Indian real estate market has seen noticeable growth in sales, sustainability, consumer confidence, and job creation over the past few years. Between 2014 and 2023, 2.82 million units were sold in India’s top 7 cities, with cumulative new launches surpassing 2.93 million units, as indicated by various reports. Similarly, jobs in the sector surged by 31 million, reaching 71 million in 2023.
 

Industry experts attribute this growth to pivotal structural reforms like the Real Estate (Regulation and Development) Act, 2016 (Rera), Pradhan Mantri Awas Yojana (PMAY), and the Special Window for Affordable and Mid-Income Housing (SWAMIH) fund.

A joint report by real estate consultancy Anarock and the National Real Estate Development Company (Naredco) suggests that these reforms could propel the Indian real estate market from $20 billion in 2017 to an estimated $1 trillion by 2030.
 

Listing the challenges in the pre-Rera era, Anarock Vice Chairman Santhosh Kumar cites lack of transparency and accountability. “Homebuyers faced project delays and stalled projects, leading to financial and emotional distress, while unregulated developers mismanaged funds, exacerbating delays,” he said.
 

This changed once several states implemented Rera in 2017.
 

Government data shows that so far, some 122,000 real estate projects have been registered under Rera, with over 121,000 consumer grievances addressed nationwide.
 

While he lauded the Act, Rajiva Singh, president, Noida Federation of Apartment Owners Associations, felt it needed further empowerment. He suggested penalties for non-compliance and the establishment of separate escrow accounts to bolster homebuyers’ confidence.
 

Another initiative that industry players praise is the government-backed SWAMIH fund, which aims to provide financial support to stalled affordable and mid-income housing projects facing capital shortfalls.
 

According to Anarock, nearly 28,000 homes have been completed under the SWAMIH fund, with another 60,000 units expected to be completed in the next three years. This initiative has not only increased the supply of affordable housing but also generated employment in the construction sector, contributing to overall economic growth, said Lakhram Goyal, managing director, Worldwide Realty, Gurugram.
 

Anarock’s Kumar drew attention to SWAMIH fund’s impact in unlocking liquidity of over Rs 35,000 crore and boosting ancillary industries in real estate and infrastructure sectors.
 

Ravi Saund, founding director of Emperium realty, too, underscored its role in providing critical liquidity to developers, enabling project completion, and reducing non-performing assets in the banking sector.
 

The stakeholders also highlighted the role of PMAY (Urban and Gramin) in bridging the supply gap in affordable housing, despite the industry’s focus shifting towards mid and luxury segments.
 

Some 11.86 million and 29.48 million homes were sanctioned under PMAY(Urban) and PMAY(Gramin), respectively, till April 2024, government data shows. A combined 33.75 million houses have been completed under the PMAY scheme since its inception, according to Anarock figures.
 

Goyal praised PMAY for targeting specific income groups and offering clear benefits, ensuring a continued focus on affordable housing amid market shifts. 
 

Kumar, meanwhile, highlighted its provision of credit-linked subsidies to lower and middle-income buyers, thereby reducing effective interest rates on home loans.
 

However, Saund cautioned that despite PMAY’s progress, the demand for affordable housing still outpaces supply, particularly in tier 2 and tier 3 cities, necessitating collaborative efforts between the government and the private sector for sustainable growth.
 

That said, an Anarock-Naredco joint report has noted a significant drop in housing inventory overhang, from 41 months in 2017 to 15 months by the end of 2023. The report attributes this shift to structural reforms, which have helped put housing on a strong foundation.