Realty on a strong wicket at 70

Vinod Behl

Real estate & housing  sector is a big contributor to national economy. Over the past 70 years its journey of transformation and consolidation , has been marked with several transformative trends, responsible for changing the real estate landscape.

From  Regulatory 

Restrictions to  Reforms 

Real estate and housing sector has come a long way after seven decades of its journey since Independence. From early years of regulatory restrictions resulting in unorganised planning and implementation and  fund crunch, to a planned, organised and reformative realty, spurring speedier urban transformation.

The significant change started only in early 90s (post liberalisation period), after National Housing Policy came into existence in 1988 and National Housing Board( NHB) and Housing & Urban Development Corporation ( HUDCO) were set up. It was the time when a proper framework — both legal & financial, was created to encourage the involvement of private sector in providing housing, with government’s role changing from provider to enabler. 

After 2000, a trail blazing reform allowing 100 per cent FDI in real estate was undertaken to give the much needed boost to the sector. FDI in real estate was further liberalised after the new government took over in 2014. It was the starting of large scale reforms and policy initiatives to give fillip to real estate. Recognising real estate, housing and infrastructure as key growth drivers, budgetary boost was given to them. A record Rs 3.96 lakh crore was allocated in this year's budget for infrastructure development and National Investment & Infrastructure Fund was set up.

As urbanisation is key to economic growth, reform missions of Amrut to rejuvenate 500 cities, developing 100 Smart Cities  and 'Housing for All 'were launched to build 20 million urban homes. Considering that the highest shortage is in low cost housing, the government put its entire focus on promoting low cost/affordable housing with enabling policy initiatives like giving infra status to affordable housing, tax incentives to builders and home buyers. The credit linked subsidy of up to 2.67 lakh to home seekers under Pradhan Mantri Awas Yojana is worth mentioning in terms of realizing the goal of shelter for all. The biggest reform  undertaken in real estate, was the enactment of RERA ( Real Estate Regulation Act) to empower and protect property buyers, by regulating real estate and making property transactions transparent. The other related reforms of setting up REITs, Benami Property Act, GST, are meant to give further boost to real estate and housing. Some more reforms like ease of doing business, single window clearance, rental housing are on the anvil to make real estate an  attractive asset class.

Development of 

modern cities

Though many new cities came up after Independence, yet there are very few modern and well planned cities that were developed in post- independent India. The trend of development of modern cities started immediately after independence in early 50s, with the development of Chandigarh in 1952. Designed by world renowned Swiss-French architect  and urban planner, LeCorbusier  the city has the rare distinction of independent India's first planned city. Gandhi Nagar that came up in 1960 as the capital city of Gujarat, was planned on the lines of Chandigarh. The other planned cities include Bhubaneswar, Naya Raipur, Jamshedpur (first  planned industrial city and Lavasa ( India's first privately planned city).

As part of the continuous urban renewal process, India is now embarking on the next stage of development of 'smart cities' — a model that can be replicated, with focus on sustainable and inclusive development with entire urban eco system offering quality of life to people, with the application of smart, interconnected technology. Under this key mission for urban renewal launched in 2015, 100 cities are to be developed as smart cities over the next five years, with a funding of 98000 crore.

Emergence of 

integrated townships

With the development of housing, independent India has seen the concept of integrated townships taking roots. These are gated developments, creating sustainable eco system, encompassing all aspects of modern living, with a balanced mix of residential and commercial spaces, together with well-developed infrastructure with green spaces and recreational amenities. Leading builders like DLF, Ansal API, Tata, Mahindra Lifespaces, Jaypee, IREO, Omaxe, EMaar, Parsvnath, BPTP, Hirco, Embassy, Prestige, Sobha etc are all engaged in the development of integrated townships. Ansal API has these townships in Noida & Lucknow while Hirco has its township projects in Panvel and Chennai. Bhartiya City is coming up with its township projects in Bangalore and Ghaziabad. Mahindra Lifespaces has mega townships of 3000 acres in Jaipur & 1500 acres in Chennai. In Bangalore, about half a dozen township projects are coming up. These include 300 acre Embassy spring, 150- acre Ozone Urbana Avenue, 130-acre Brigade Orchard & 100 plus acres Prestige Lakeside.

Further, the niche concept of themed townships has caught up, with a large number of developers coming up with golf townships. In NCR, a consortium of builders is developing a golf township in Noida over 150 acre.  On the outskirts of Chandigarh, a 300 acre ATS Golf Meadows luxury township project is coming up in Dera Bassi. In Ludhiana, there is Imperial Golf  Estate project.  As part of themed townships, the concept of green townships is also catching up. Newtown township project by Patel Realty is one of the first few township projects to be pre- certified by Indian Green building Council (IGBC).

Birth of satellite cities

India saw the emergence of the concept of satellite townships in 70s, with the development of Navi Mumbai in 1972 and Noida in 1976. Navi Mumbai and Noida were followed by Gurgaon, Mohali, Panchkula and Pimpri- Chinchwad(Pune ). These were conceptualised as counter magnets to decongest metro/mega cities. Over the years, they have emerged as vibrant self- sustaining urban centres. In Kolkata, Newtown is a fast growing up coming satellite township which is to be developed as India's first green city. 

In North, Mohali and Panchkula have come up as satellite towns adjoining Chandigarh. the trio of three cities has come to be known as Tricity.. Meanwhile, Telengana has planned 13 satellite townships while Karnataka is developing over half a dozen such townships.  India has a dozen upcoming planned satellite cities, including Amravati, Naya raipur, Newtown, New chandigarh, New Kanpur City, Gift City, Gandhinagar, Dholera City, Ahmedabad, Hitech City, Hyderabad, Dream City Surat, Vikram Industrial city, Madhya pradesh.

From corner shops 

to shopping malls

 The real estate slowdown in 2008 gave a temporary setback to malls. But over a decade, malls have attained the stature of providing complete shopping experience. And the year 2017 is expected to be a good year for malls, with over two dozen malls getting operational- clocking the highest supply of mall space in more than 5 years. 

According to global property consultancy, Cushman & Wakefield, a total mall supply of 10.86 msf is expected this year. A number of mall developers are on expansion spree, thanks to the strong investor interest due to relaxation in FDI regulation, profitable exit routes in good quality shopping centres and waning of e-commerce. 

Public- Private Partnership

Real estate and housing remained retarded till many years after independence, due to flawed policy of putting the entire onus on the government to develop the sector. This faulty approach resulted in severe shortage of funds to carry out the massive task of real estate and housing development. It was only in the liberalization era that the government  gave up its role as a direct provider of housing and created the necessary framework for the involvement of private sector. Today, private sector is playing a big role, supplementing government's efforts in the growth of real estate.

Fund crunch has been the biggest bane of real estate and housing. In order to draw foreign funding into the sector, a major reform to allow 100 percent FDI was made which was further liberalised by the present government. And this has helped boost foreign investment . The introduction of REITs (Real estate Investment Trusts), which are expected to become operational this fiscal, are going to further boost funding to real estate. 

The ongoing transformation in business environment has seen robust inflow of both domestic and global institutional investors, especially as real estate business has become more organised, transparent and regulated, with the enactment of RERA ( Real estate Regulation Act). So much so that now even foreign pension funds are drawn to Indian real estate with big players like Canada Pension Fund chalking out plans to invest $1.7 billion in Indian real estate, paving the way for its speedier growth. 

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Home finance growth

Notwithstanding the  massive shortage of about 2 million urban homes, the latest reform- led thrust to boost housing market, is showing its results. And one big factor contributing to this, is the development and deepening of home finance market. Today, both banks and NBFCs are playing a significant role in boosting the mortgage market which is estimated to be worth $18 billion.India Mortgage Guarantee Corporation (IMGC) , formed to make early home ownership a real possibility through the provision of mortgage guarantee, is playing no less important role in deepening this market.

Till few years back, home loan market's penetration was restricted only to big cities. But with aggressive marketing by banks and NBFCs , it has now penetrated to tier 2, 3 & 4 cities. Many NBFCs  are today focusing exclusively on smaller cities and small ticket loans. And in order to bring more home seekers under the fold of mortgage, some NBFCs have tailored their products for untapped informal sector. The government's reforms to provide tax incentives to first time home buyers and low cost homes, are paying rich dividends. The present government has raised LTV to 90 percent for affordable homes to enhance home affordability. Especially the Pradhan Mantri Awas Yojana (PMAY), is playing a crucial role in boosting martgage market by offering a substantial credit linked subsidy of up to 2.67 lak for buyers of affordable /low cost and  MIG homes. Especially by making families having 18 lakh yearly income eligible for PMAY, has widened the coverage of home loan market. The result of all these progressive policy measures is that we are witnessing big transformation in a sense that earlier people used to buy homes in old age and today more and more youngsters are able to buy homes.

From hinterland to high rises

Till a few years back, housing witnessed the trend of low rise developments and there're hardly any buildings more than 5-10 storeys. But with increasing population, rapid urbanisation and pressure on land amidst growing demand for housing, the trend of high rise buildings came up. I recent years, the trend of high rise buildings has gained momentum. And today, it's common to see 25- 50 floor building. Lodha builder is developing world's tallest residential tower of 117 floors in Mumbai. At 254 nts, Imperial Towers is the tallest completed building in India, with 250 mts high , with Ahuja Towers being the second tallest. Bangalore has about 30 buildings with 100 plus metre height with Mantri pinnacle being the tallest with 46 floors with a height of 153 mts. In Chennai, Akshaya Group is building 38- floor luxury green tower- Abov, standing 132 mts high. Omkar Realtors' '!973' , a super luxury sea front sky scraper, with its penthouse apartments costing up  Rs 80 crore .As residential skyscrapers being essentially luxury developments, preferred  because of better view and clean environment, the trend of high rises is here to stay.