National Real Estate
Development Council (NAREDCO) recently convened a 2 day conclave involving all
the stakeholders of the real estate industry to discuss the strategy for
implementing `Housing for all by 2022'
** The Ministry of Rural Development discussed
its programme to build 3 cr houses for the homeless by 2022, under the National
Gramin Awaas Mission (GRAM), at an estimated cost of Rs 3.45 lakh crore. This
works out to Rs. 50,000 crore a year spending by the government.
** Mr. Venkaiah
Naidu, the urban development minister, discussed with all the stakeholders the
policy to ensure “Housing for all by 2022“ at the convention.
** One estimate says
India will have to develop more than 10 cr houses by 2022 to achieve housing
for all in India. This will require an investment of more than $ 2 trillion at
today's cost, or about $ 26,000 cr annually, more than double the current level
of investment.
** The investment in
housing sector must grow at a CAGR of 18% to 20% (factoring in 6% to 7% of
inflation, annually) till 2022, to achieve the vision of “Housing for all by
2022“, NAREDCO said in its discussion paper.
** Nearly $ 1.5
trillion additional investment would have to be made to support urban
infrastructure and commercial real estate to achieve sustainable growth.
** Now, the Real Estate sector is registering
investment of about $16,000 cr, of which nearly 80% is for residential
development.
** Since 2007 - 08,
the Indian realty sector has attracted close to $1 trillion in funds, with
households contributing nearly 72% of the fund.
** Institutional
lending including housing loans (by banks and housing finance companies - HFCs)
accounted for nearly 18%, followed by government, equity raising and private
sector (3% each). Investments have risen
at a CAGR of 14%, between 2007-08 &2013 -14.
** Lately, the sector
has started facing significant liquidity crisis owing to multiple factors like
weakening of global and local economy and lessening of household support to the
sector. Large capital flow between 2006 and 2008 is up for redemption now,
affecting liquidity in the sector. This has brought down the growth in
investment in the sector to less than 2% in the last couple of years.
** Reeling under
consistent increase in property prices & high interest rates, the
investment from households has also weakened in the last couple of years. Some respite has been provided by lending
institutions, but these sources have only filled the gap created by equity
capital, and recently by households, and have not provided any significant
growth capital.
** The major
bottlenecks that the realty sector is facing on the fi nancing side are weak
financial markets, weak global and local economy, no institution supporting
long-term funding, lack of real estate dedicated financial instruments (thereby
restricting flow of capital to the real estate sector), no formal lending
sources for developers to acquire land, and structural issues like Rent Control
Act deterring investment in rental housing sector.
** NAREDCO also
expressed concern over the regulatory environment which delays the
implementation of projects. It said only about 8 years is available with the
government to achieve its vision of “Housing for all by 2022“.
** Considering the
fact that a real estate cycle (from conceptualisation to hand-over stage) is
around 7 to 8 years, reforms in
improving funding and clearances by regulatory authorities and government
bodies are required now for any visible action over mediumlong term.
National Real Estate Development Council
First Floor, 8 Community Centre,
East of Kailash, New Delhi - 10065
Phone: +91-11-26225795, +91-11-41608570
Fax: +91-11-26225796
E- mail: naredco@naredco.in
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