18 September 2017, 02:09 PM

Will 2017 open new doors for the real estate sector?

Will 2017 open new doors for the real estate sector?

The real estate and construction sectors are crucial for the economic growth of India as they are the third highest contributor to the Indian economy and the third largest employer. The total market size of the Indian real estate sector is estimated to have doubled since 2008 and reached about Rs.7 lakh crore. India has the largest housing market in the world. But the sector has its share of challenges. One of the major problems that the sector is facing is related to scarcity of land. India is witnessing high urban population growth but the per capita urban infrastructure is very low, which is restricting the growth in the real estate sector.

There is high demand for housing and commercial projects but due to non-availability of land within city limits and rising cost of land and construction, the real estate sector is facing increased costs. According to a report published in Business Line, the buyers are concerned about real estate companies’ usual practice of having payment schedules that allow them to collect over 90-95% of the cost of the apartments before the actual delivery due to market trends.

Real estate financing

Real estate sector contributes nearly 6.3% of the country’s GDP. So far, it has attracted $32 billion in private equity and the global capital flow into Indian real estate in 2016 stood at $5.7 billion. While the big ticket realtors and developers get easy access to loans and advances for new constructions, small developers most often don’t get such funding. This often leads to stalled projects, stressed developers, and harassed buyers. A developer from Kolkata told BE, “Past projects, track record, and professional proficiency are also checked while considering the builder for providing loans.”