The real estate sector is touted as the second largest employer in the country, just next to agriculture. This one fact reveals the core importance of the sector in the economic growth map of India. The sector comprises of 4 segments: residential, office, hospitality and retail properties.
If industry reports are to believe, the housing sector alone contributes around 5-6 percent to the GDP in India. As per the estimates of India Brand Equity Foundation (IBEF), the total market size of the real estate sector in India will touch US$180 billion by year 2020. The sector has witnessed a Compounded Annual Growth Rate (CAGR) of around 11 percent in the period between FY2008-2020.
Given the fact that housing is one of the three main basic necessities – roti, kapda aur makaan – in human lives, the real estate sector in India always remains under spotlight. Unfortunately, despite having such a critical role at both macro and micro economic levels as well as society, the real estate sector in India remained largely unorganized.
The government did not take active participation in the development of housing in the country and the responsibility to build quality real estate is placed majorly on the shoulders of the private sector. It is not that the government authorities did not do anything. The Development Authorities under various states certainly constructed residential properties in India, however, their volume and level of quality remained below par than what is offered by average real estate developers.
Thanks to the renewed focus on the affordable housing projects in India, the government of India is now working with an unprecedented pace and commitment to fulfill the growing demands of housing by citizens of India. The government has set eye on an ambitious target of building 2 crore homes by year 2022, that means there is a plan to provide housing to at least 8-10 crore people in India.
If this dream is realized, then the size of the real estate sector is going to multiply by several folds. Currently the investor wealth in the real estate sector in India is registered at around Rs 60 lakh crore, and once these 2 crore homes enter the market, the value is going to touch new heights.
This is of course not going to be possible without the support from the private sector. There are going to be public private partnerships (PPPs). There are going to be innovative models that facilitate fast development of residential properties in India. The private equity (PE) players will be even more active in the coming times.
There is already a heavy uproar by the institutionalized funds who are making beelines to get some pie of the massive affordable housing projects in India. In year 2016, the PE player infused as much as Rs 40,000 crore in the real estate sector in India. These numbers are still seen as tip of the iceberg and the industry is expecting even greater participation from fund houses from Singapore, US, Canada, Japan, Hong Kong and even China.
The Middle East countries are also quite keen to leverage the opportunities offered by the real estate sector in India.