What Has Changed in Indian Real Estate over the Last Decade

In a transformative decade marked by reforms and economic shifts, India’s real estate sector has emerged as a powerhouse, significantly contributing to the nation’s growth trajectory. A recent report by the real estate industry offers insights into the sector’s evolution under the Modi government, shedding light on its challenges, reforms, and prospects.

The report highlights the sector’s exponential growth, with its value estimated at around $120 billion in 2017 and projected to soar to a staggering $1 trillion by 2030. This growth trajectory is coupled with the sector’s substantial contribution to India’s GDP. The report notes a significant drop in housing inventory overhang over the last 10 years, with the pan-India housing inventory overhang decreasing from 41 months in 2017 to 15 months at the end of 2023.

Implementation of Real Estate Regulatory Act (RERA)

Titled ‘Real Estate- Unboxed’ and conducted by the National Real Estate Development Council (NAREDCO) and ANAROCK, the report spotlights issues in the real estate sector before the implementation of various regulatory measures. Major challenges included fund misuse, lack of accountability, project delays, bureaucratic hurdles, and the absence of standard practices. The introduction of the Real Estate (Regulation and Development) Act, 2016 (RERA), marked a significant turning point, aiming to address these issues and ensure transparency, timely project completion, and developer accountability. As of February 2024, more than 1 lakh projects have been registered under RERA, with 1,20,000 complaints disposed of, according to the report.

Impact of PMAY

The report also focuses on government schemes aimed at fostering housing and real estate growth in India over the last decade. Initiatives like the Pradhan Mantri Awas Yojana (PMAY) have played a pivotal role in promoting affordable housing and addressing the housing needs of urban and rural populations.

The residential sector has undergone significant transformations, driven by economic scenarios, government regulations, and the COVID-19 pandemic. Despite fluctuations, there has been a persistent demand for housing, with significant new launches and sales recorded over the past decade. Looking ahead, the real estate sector is poised for sustained growth, with projections indicating a market size of $1 trillion by 2030.

Anuj Puri, Chairman of ANAROCK Group, states, “The report tracks how India’s residential real estate sector has thrived in the past decade. The findings are convincing—housing demand and new supply in the top 7 cities have soared in the last 10 years, particularly post-pandemic, and housing sales are now aligned with new launches.”

“Approximately 28.27 lakh units were sold in the top 7 cities between 2014 and 2023, while cumulative new launches stood at over 29.32 lakh units. Residential property prices have also registered significant demand-led growth across the top 7 cities, appreciating in the range of 25–60% over the last decade,” adds Puri.

Special Window for Affordable and Mid-Income Housing

Since its inception in 2019 until December 2023, the SWAMIH Fund has completed approximately 26,000 homes in the country, with 80,000 more projected to be completed over the next three years. The government’s SWAMIH (Special Window for Affordable and Mid-Income Housing) Fund aims to provide financial support to stalled affordable and mid-income housing projects struggling due to capital shortfalls. It has played a crucial role in addressing the sector’s liquidity issues, unlocking liquidity of more than ₹35,000 crore and boosting the growth of many ancillary industries in the real estate and infrastructure sectors.

Niranjan Hiranandani, Chairman of NAREDCO, says, “NAREDCO and ANAROCK collaborated to assess the Indian real estate sector’s growth over the last decade in light of the Indian government’s reforms. India’s economy has impressively leapfrogged to the fifth position on the global economic performance ladder. A market size of $1 trillion is expected by 2030, up from $200 billion in 2021, contributing 13% to India’s GDP by 2025.”

Employment generation has been a key hallmark of the real estate sector, engaging over 18% of India’s workforce and fostering the growth of more than 250 ancillary businesses. As the sector continues to expand, employment opportunities are expected to multiply, further bolstering the nation’s economy. Foreign direct investment (FDI) has poured into the sector, with construction ranking third in terms of FDI inflows. Between April 2000 and September 2023, FDI in the real estate sector amounted to a staggering $58.5 billion, highlighting its allure to international investors.