India, touted to be one of the fastest growing economies in 2016, saw a modest slump in real estate market in 2015. Despite slow growth in initial quarters, real estate sector ended on a high note in 2015. After timely intervention by policymakers, real estate market is hopeful of seeing outstanding growth in 2016.
India revived its investment strategies in 2015 to attract investments from all quarters. Investments in form of FDI received a boost by 27% in 2014-15. Thus, experts are hopeful that real estate sector will grow very well in 2016. There is an expectation of growth in investments; particularly in form of FDI because the government is trying to ease norms for foreign investors. Real estate got the lion’s share of positive policy revival initiatives from Indian government’s plan to revive FDI investment in India. The government has put forward a transparent and comprehensible report on FDI. As per the new rules, non-repatriable investments by NRIs and PIOs will be treated at par with domestic investment, thus keeping it out of the purview of FDI caps. Furthermore, this has also been extended to companies, trusts, and partnership firms owned by NRIs outside of India. These NRI entities have also been exempted from FDI cap regulations.
With the Indian economy on a stronger foothold and tardy bureaucratic procedures being channeled out, industry is hopeful that NRI investments will see a boost. Achal Raina, Group President, M3M Group, said, “With regulatory changes including easing of foreign direct investment rules and better execution capabilities, Indian realty is being preferred as an investment destination by global investors. Transparency in processes like online approval will further improve the perception of Indian real estate in the eyes of international investors. This would help them bring in robust inflows of funds in the sector. The hottest growth sectors in Delhi – NCR area are Gurgaon (Golf Course extension Road), South of Gurgaon, Noida Extension and areas adjoining Dwarka Expressway, KMP Expressway and SPR.”
Indian Parliament has also introduced The Real Estate (Regulation and Development), Bill in 2015. The bill seeks to regulate the transactions between buyers and real estate projects to increase the ‘trust’ factor between the two parties. Sulekha Mandahar, Head of Sales and Marketing, AMB Group, said, "The recent amendments in Realty bill introduces the Insurance of land title for the first time in India which shall Lead to renewed confidence among buyers and will definitely impact the real estate market favourably in year 2016.”
Indian government’s ambitious “Housing for all by 2022” will see an increase in joint investments by public and private sector to provide affordable housing. Moreover, the vision to develop 100 cities into ‘smart’ cities will provide real estate sector with the robust opportunity to invest in Tier-II and Tier-III cities. Also, The National Highways Authority of India (NHAI) is planning to award 100 Highway projects under Public-Private partnership in 2016. Potential Build-Operate Transfer projects are being looked into by The Cabinet Committee on Economic Affairs (CCEA).
“Real estate has rode past the bumpy roads of economic slowdown. The roadmap for 2016 seems clear of obstacles. With a sustained growth rate of 7.4% the market scenario is sure to improve. The recent changes in FDI policy that now allows investment by foreign players in India.The decision of reduction of repo rate by RBI, relaxing norms for FDI & clearing way for of The Real Estate Bill by the cabinet etc. are welcome steps. It is also expected that the Reserve bank will reduce the repo rate further in the next year after keeping it unchanged this time. We expect that financial institutions will pass on the benefit which has been extended by the RBI in the previous reviews and lending rates will come down.These steps have generated a buzz in the industry and the next year seems to be full of promises. With enough boost from the government and RBI this state of affairs is all set to change in 2016," said Rajesh K Gouri, Vice President, Homestead Infrastructure.
Overall, the stage is set for a stellar show by the Indian real estate sector in 2016.