RICS and CREDAI to Train Middle Managers in Real Estate & Construction

RICS, the global professional body for chartered qualifications and standards in built environment, and CREDAI, the leading association of real estate developers in India, have announced the second phase of the “RICS-CREDAI Skills Development Initiative” aimed at jointly working towards capacity building and skills development in the Indian real estate sector.

Amongst many challenges in Indian real estate sector, the immense shortage of skilled professionals leads to delay in project deliveries, cost overruns and compromised quality.

RICS has been offering specialized education and training programs – ranging across full time degree programs (through RICS School of Built Environment, Amity University), Executive education, Management development programs, Distance learning certificate courses etc.

CREDAI has taken the lead to ensure that development and construction firms upgrade the knowledge and skills of their staff and has thus partnered with RICS to offer Management Development Programs (MDPs) – i.e. short residential programs in metro cities. To begin with, MDPs will be offered in three priority areas namely - Construction project management, Quantity surveying, Real estate sales & marketing. The programs are targeted specifically for middle management professionals and will be implemented by delivery partner – RICS School of Built Environment, Amity University.

Commenting on the importance of this initiative, A Balakrishna Hegde, Chairman, Training Committee, CREDAI said, “CREDAI and its members are at the forefront of building real estate in India. With this collaboration, we hope to enhance the professional expertise in order to execute complex real estate projects. We are happy to partner with RICS, the leading global professional and standard setting body in built environment. Being the global accrediting body for over 600 built environment university courses; we strongly believe their programs are unmatched in terms of curriculum and learning outcomes. We are sure that the courses offered under this Skills Development Initiative will enhance skills in order for our members and their teams to better deliver projects that are completed on time and at reduced costs.”

Commenting on the partnership, Sachin Sandhir – Global Managing Director, Emerging Business RICS said - “Although the real estate and construction sectors are key contributors to economy, there is a complete vacuum of education and training options available for professionals to up-skill. RICS launched distance learning programs a few years ago and there has been overwhelming participation of professionals from small and big towns. This partnership is a huge stepping stone to ensure that a majority of industry now has easy and economical access to education and training options of the highest standards, which in turn will help the sector become more professional and efficient. In this regard, CREDAI’s forward thinking and focussed effort in making sure all their members give due importance to up skilling their professional teams, is to be applauded.”

Joint Ventures for Sustainable Real Estate Development

The Indian real estate sector is currently passing through a critical phase and the government has finally realized the fact that there is a need to create positive environment in order to attract investments and kick-start the sector, if we are to achieve housing-for-all by 2022, writes Manju Yagnik, Vice- Chairperson, Nahar Group.

Towards this end, the government has begun the process of initiating a number of favorable industry policies like Relaxed FDI rules, proposed Development Plan 2034, State Regulatory bill,  Smart Cities, GST etc. These are some key drivers which have the potential to improve the market sentiments and propel growth of the realty sector in India. 

Real Estate sector is the second largest contributor to the economy after agriculture. The growth of this sector is therefore essential for the economic growth of the country.

The main challenges faced by developers during 2015 were uncertainties in government policy which directly affected the confidence level of the buyers and the developers alike, issues related to the easy access to funds and liquidity crunch faced by most developers during the year as banks and financial institutions were hesitant to lend to the sector and ease of doing business. Both these factors delayed new project launches and slowed down completion of ongoing projects.

In such a scenario where there is a dearth of capital or limited avenues to raise funds for development of projects, there is a growing trend being witnessed that of developers who are now looking at joint partnerships to develop projects. Here, there are two types of joint venture (JV) partnerships namely - one with the land owner and developer and the other where like-minded developers come together to develop projects. This kind of association takes care of capital requirements, reduces the risk involved and helps in faster development of larger residential projects.

The joint venture where landowner jointly develops the property with developer has been quite successful and currently a few leading developers are developing projects based on this type of a model. Here, developers partner with the land owners in jointly developing the property. This type of development is mutually beneficial to both the parties as the developer does not have to invest large capital to buy the land (which constitutes nearly 50% of total project cost) and the land owner will not have to arrange funds for the construction nor will he have to scout for developers to construct and market the project. The Joint Venture partnership also facilitates developers with local expertise in a new city where a developer wants to start a project. This way a developer can look at starting projects in multiple cities with local partners.

Nahar Group too has few of such projects which are on-going and upcoming.

This is currently trending in the real estate sector due to various reasons, one of them being market slowdown and dip in sales, which in turn has created liquidity crunch and limited access to funds by developers. In fact, with the passing of the Real Estate Regulatory Bill we may see more of such alliances as submission of 70% of project revenue into escrow accounts, being made mandatory, would ultimately limit the liquidity of the developers.

But on the flip side, the State Regulator bill could lead towards finally getting industry status for the sector. The HRA will help in weeding out fly-by-night operators who malign the industry and bring more transparency. Also, this will result in well established players getting a wider platform to operate, with more clarity and possibly single window permission being made available as the regulator would require the completion of the project in given stipulated time frame. Banks and financial institutions will also not hesitate in advancing loans once industry status is achieved.

The other recent trend that is gaining traction among leading developers across the country is that of a few developers forming an alliance to undertake residential projects jointly. Here the concept is based on individual developers bring to table their respective expertise in developing the project. For instance one developer will bring in the capital, another helps in getting necessary approvals from local authorities and third constructs the project while the fourth does the marketing of the project.

In this way each developer, based on the expertise, takes care of one department in the entire gambit of project development which ensures economy of scale, reducing risk and completion of project within the given time frame. Of course this is done with a lot of pre-arranged agreements acceptable by all partners.

These joint ventures seem to be the result of developers trying to beat the downturn and sustain themselves in a rather competitive and challenging environment. As the saying goes "Tough times call for Tough measures" can be apt to describe these innovative plans of developers in the given situation and time to come.

Therefore to conclude, joint venture is the new paradigm shift in real estate development and we can look at more of such associations among various stakeholders within the real estate industry partnering together in the hope of getting better valuation and self-sustenance in the long term.

About the author: 

Ms. Yagnik has been associated with Nahar Group for over two decades. After completing her graduation from Kurukshetra University, she decided to use her skills in a profession that was challenging but yet matched her passion. She entered the real estate industry by  joining the Nahar Group. Creating unique land spaces, coming up with unique initiatives for consumers, understanding consumer behaviour, being a decision maker, managing people, she has been a part of every activity in this group since then

Will RBI’s Generous Rate Cut Revive Real Estate Sector?

Anuj Puri, Chairman & Country Head, JLL India opines about the recent rate cut by RBI and its impact on Indian real estate sector.

Anuj Puri

As opposed to the market’s expectation of a 25 basis points cut, the RBI has delivered an astounding 50 basis points reduction. With this, it has clearly abandoned its cautious baby-steps approach and assumed a bolder stance, obviously because the current economic fundamentals provide it with the room to do so. Given the magnitude of this step, I do not think any further rate cuts are likely in this financial year, especially since the RBI foresees a moderate growth in inflation rate in the interim months.

For the affordable housing sector, the outlook is nevertheless bright, since the RBI governor has made provisions for lending to this sector to become less stringent and broader in scope.

Of course, real estate industry stakeholders – particularly end-users and investors in residential property – is still left with questions about how well RBI’s latest move will work in reviving the industry. It has been noted that selling prices must come down before any significant revival can take place, and that reduced interest rates alone are not sufficient.

In the first, place it is incorrect to say that prices have not corrected. A majority of new housing project launches have been at lower rates than those of earlier projects launched in the same category projects and in the same locations. Also, while developers in the residential sector are definitely feeling the pinch owing to high inventory levels and restricted upward momentum in prices, they are careful not to continue with a slew of new project launches in the premium and luxury segment.

Rather, over the last few quarters, the focus has been on launching projects that fall in the mid-segment category. In the case of tier-I cities, this would include apartments priced under Rs. 1 crore.

Firstly, there is ample demand for mid-segment homes within the city limits of major metros in India. Secondly, executing projects in the affordable category requires good technical expertise and a high level of professionalism, and therefore may not be a forte for a large set of developers.

As a consequence, over the next few years, average prices across major cities would witness a fall to levels that are more sustainable. It is important that both the RBI and government take necessary prerogatives to boost developments in the affordable category. Policies such as Housing for All and the recent RBI directives will go a long way in helping the cause.

Ireo begins handover of keys in Ludhiana township project

LUDHIANA: Ireo, India's first and one of the largest FDI investors on Indian real estate sector, commenced handover of plots and villas in Phase 1 and Phase 2 at Ireo Waterfront, the 500-acre planned township situated on the Sidhwan Canal Road in Ludhiana.

Villa Handover - Madhukar Tulsi, President Ireo handing over a completed waterfront villa to an Ireo Home owner

Ireo Waterfront Villa Neighborhood

Arrival and Road Infrastructure at Ireo Waterfront

The world-class township comprises high-end villas, apartments, business parks, schools, healthcare facilities and a 5-star clubhouse backed by state-of-the-art infrastructure.

Speaking on the occasion, Madhukar Tulsi, President at Ireo, commented, "We are extremely delighted to announce that a significant milestone has been crossed with the commencement of handover of the first villas and plots in Phase 1 and 2 at this world class 500-acre township. We are thrilled that Ireo's proud owners will soon possess their new homes that are backed not just by top grade township infrastructure but also a lively and comfortable residential environment."

Basic township infrastructure including electricity, roads and security as well as recreational facilities are already in place for the residents who will start moving in to their brand new homes. The entire township receives direct PSPCL grid electrical supply and there is provision for 24-hour power back-up facility in villa neighborhoods that are being handed over.

For easy vehicular and pedestrian connectivity, over 12-km length of internal roads and inter-connecting pedestrian walkways have already been laid out. A 3-tier township security network backed by day and night mobile patrolling, regulated township entry/exit and a 'Suvidha' helpline for all residents, ensure a safe and secure residential environment.

Residents can also indulge in various sports and fitness activities that have been operational since November 2013. Recreational facilities that are fully functional include two lawn tennis courts, two badminton courts, a 5-acre cricket ground and a yoga room. Professional coaching is available and these facilities are open to all the property owners of Ireo Waterfront.

Key Features of villas:

• 12 km of internal road network

• Direct PSPCL grid supply for the entire township

• 24-hour power backup

• Round-the-clock township security

• 15000 sq. mts. of landscaped linear parks

• Fully functional sports facilities - 2 tennis courts, 2 outdoor badminton courts, yoga room and 5-acre cricket ground

About Ireo:
Ireo is private equity fund dedicated to the Indian real estate sector with nearly US$2 bn of funds committed to India. The group has a pan India footprint with a land bank of more than 4500 acres and 23 projects in prime locations across NCR, Haryana, Punjab, Tamil Nadu and Maharashtra under various stages of development and implementation. Recent successful project launches from Ireo have been Ireo Skyon, Ireo Uptown, The Grand Arch, Ireo Victory Valley and Ireo Gurgaon Hills  in Gurgaon and Ireo Rise in Mohali. It is also developing integrated township projects with residential, commercial and retail developments accompanied with amenities such as schools and hospitals in Ludhiana, Gurgaon and Panchkula named Ireo Waterfront, Ireo City and Ireo Fiveriver, respectively.

Ireo has been present in India since 2004 and has evolved as a fully integrated real estate organization. Ireo's team consists of internationally experienced and accomplished Indian and expatriate professionals from diverse backgrounds to lead initiatives and to deliver best in class products and services to their customers.

Real estate sector needs encouragement: Girija Vyas

Girija Vyas

New Delhi: Housing and Urban Poverty Alleviation Minister Girija Vyas today said the real estate sector, which is grappling with problems like manpower shortage, should be encouraged to boost the economic growth of the country.

Speaking at an event organised by CREDAI, Vyas said the urban population has registered a decadal growth of approximately 32 percent.

"There is a large stake in ensuring that cities and towns are efficient in order to help India achieve an eight percent GDP growth and to contribute to other developmental goals. Real estate has the potential to create the right economic environment for such a population expansion," Vyas said.

She said the sector is the second largest employer after agriculture and its multiplier effect on other industries is well known. The potential of this sector to create a positive impact on Indian economy should be encouraged, she said.

She added India's real estate sector continues to struggle with manpower shortage and by 2022 it alone will need 30 percent of the human resources which amount to 24.98 million personnel.

Vyas also said that due to ever-growing urbanisation "our cities face problems of land shortage, housing shortfall and severe stress on basic amenities and services."

"2011 census puts the slum population at about 18 percent of total urban population. As per my ministry's estimates, the housing shortage in India today is 18.78 million households, out of which 95 percent is for Economically Weaker Sections (EWS) and Lower Income Group (LIG) categories," she said.

Vyas said this is "an alarming" situation and added that to prevent proliferation of slums has been an objective of the National Urban Housing and Habitat Policy 2007.

She said private developers had a big role to play in this area and low-budget housing, when subjected to mass production, made a great business opportunity with a social cause. PTI

With Gold Prices Sinking, What Is The Future Of Indian Real Estate?

Will real estate prices in India too tank like Gold? Unlike gold there are not much external parameters which  can decide the fate of residential real estate in India. Though international markets ‘sentiments’ sometime play havoc on Indian stocks, there will not be any follow up action on real estate but one can expect marginal decline in real estate investments due to gold rush.

Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India feels that, “With gold prices currently on the descent, many investors are asking themselves if residential real estate prices will follow. Gold and real estate are the two primary investment routes for retail investors in India, so this is definitely a valid question to ask.”

The performance of residential real estate as an asset class is doubtlessly dependent on the macro-economic factors that also dictate the performance of other asset classes, including gold. Nevertheless, the correlation between gold and real estate prices is not as distinct as one may at first assume.

Price movements in the real estate sector are the result of supply and demand. This is true for gold as well, but the demand drivers for real estate are not the same as for precious metals. Though, in investment terms, they technically fall under the category of asset classes, the demand for residential property stems from the desire for home ownership that is hard-wired into the Indian psyche. It is demand from end-users that dictates investors’ appetite for residential property.

In India, precious metals are an investment class that most people will consider after this basic desire is satisfied. Moreover, the prices of precious metals are not location-specific – they rise and fall uniformly. This is hardly the case with real estate, which performs differently at different times in different cities and micro-locations.

In a vast country like India, it stands to reason that various markets will display varying pricing dynamics. Real estate valuations also range from rational to irrational in different areas within the same cities, depending on the levels of supply, demand and investor activity. At the same time, other cities continue to remain uniformly rational because they are largely end-user driven.

How Good Is Residential Real Estate For Investment Today?

There is no one-size-fits-all formula for the viability of residential real estate as an asset class for investment. Different investors have different levels of expertise, experience, market knowledge and risk appetites when it comes to different asset classes. Those with insufficient expertise in stock trading are not likely to see satisfactory ROI from their activities on the stock market.

Likewise, investors who lack the requisite knowledge and research to make winning real estate investment decisions will not meet with much success in this vertical. Real Estate investors who have sufficient market knowledge or work with experienced real estate consultants will not fail to see lucrative returns on their investments.

Three parameters for successful investment in any asset class are when to invest, how much to invest and when to exit. In real estate, three additional variables are where to invest, into which size and configuration, and in which location.

Residential Real Estate Investment - Short-Term & Long-Term Outlook

In the short term, residential real estate prices in different cities will either remain steady see minor upward or downward fluctuations. In the long term, they will rise again. The fundamentals of the India real estate story are extremely strong. Even in this turbulent economic environment, India remains the cynosure of interest by global MNCs and investors who see the limitless potential of a young, growing economy, a wealth of highly trained workforces across the manufacturing, IT/ITeS and services industries. All this translates into assured job creation, and therefore demand on the residential real estate market.

However, Indian residential real estate is definitely not the best route for short-term investors. When it comes to opportunistic trading, gold is doubtlessly a far more suitable asset class – not least of all because one can purchase it in small or large amounts and liquefy it quickly. Turning a profit with gold is really only a matter of timing the market.

Of course, this applies for residential real estate, as well. However, thanks to a conservative banking system that makes ‘flipping’ extremely unattractive, residential real estate as an investment class is a very different ballgame in India. More and more regulations are being brought in to subdue the appetite for speculation in this sector. Also, the lowest entry point is definitely much higher than for gold. Finally, it requires a minimum ‘incubation’ period in order to bring ‘appreciable’ returns.

Even after one has satisfied all the basic investment criteria - good location, right size and configuration, right entry point and right entry price - one needs to stay invested for the mid-to-long term in order to garner the best possible returns. As a general yardstick, an investment horizon of 3-5 years is ideal.

Bring in REIT exchange to solve housing problems, suggests Knight Frank

A Real Estate Investment Trust (REIT), where properties can be bought and sold like securities, can address the acute housing shortage in India and enable people to participate in real estate investment, a leading real estate investment consultant has suggested.

Explaining further, Knight Frank in its latest research report said, “REIT should be an entity that would directly own income producing real estate assets and provide a trading mechanism to the investors. In most of the cases it should be commercial projects like office buildings, retail malls and hotels and in some cases it can be housing complexes. The institutional market of REITs can ensure steady supply of capital to real estate development which shall aid in increasing the supply of houses and also serve as an investment vehicle for individuals.”

Giving examples of US and other European markets, the report said the depth of the REIT investment vehicle in developed markets can be assessed from the amount of capital raised over the years. “For instance, in the US market, REITs have raised USD 66.8 billion in 2012 (until November) alone and the momentum of fund raising through this investment vehicle has steadily increased since the global financial crisis of 2008,” it said.

While the benefit of sustained financing to housing does not need an elaboration, the investment argument in a REIT needs to be highlighted, it said, adding, investment in REITs has several advantages to the investor.

The report also noted that the high value of the property prohibits an individual investor in India from participating in this asset class. The participation of most number of individuals is barely in terms of one house property for self- consumption. It is a quandary for a commoner who has to put off his house purchase decision and at the same time is left out from participation in one of the largest main stream asset class. REIT will give the right opportunity for the individuals to participate in real estate investment according to their budget, Knight Frank report said.

Housing shortage

About 377 million Indians comprising 31% of the country’s population, live in urban areas according to Census 2011. By 2031, about 600 million Indians will reside in urban areas, an increase of over 200 million in just 20 years. This change in the socio-economic landscape will have a bearing on several things, housing being the foremost. 

At the same time, The Technical Group on the Estimation of Housing Shortage projects the total shortage of dwelling units in urban areas in 2012 to be 18.78 million. The estimated slum population in India is 94.98 million in 2012. As against this, the number of dwelling units sanctioned under JNNURM in 7 year Mission period was 1.6 million. The supply of decent affordable housing by private sector has remained woefully inadequate. 

Investment options

In contrast to this opportunity presented by the housing shortage, the real estate sector has witnessed bottlenecks to service this unmet demand. While there are varied reasons for this situation, lack of sustained financing options remains the most critical one. Institutional finance to the sector has witnessed a slowdown. Bank credit to the sector has slowed down on account of increased risk perception translating to higher provisioning and increased cost of funds. In the last two years, the growth in banks’ credit exposure to the real estate industry has come down from 19.08% in Nov’10 to 5.29% in Nov’12. In contrast, credit growth for housing loans has marginally increased to 13.25% in Nov’12 from 12.21% in Nov’10.

Similarly, foreign investment in the sector has also witnessed a downtrend. First, the overall Foreign Direct Investment (FDI) in the country has declined in the current financial year until October. Second, the share of real estate has declined by an even larger magnitude. From 9% in FY12 the share of the sector has fallen to 5% in FY13 (until Oct) in the total inflows in the country. Raising money through sale of equity shares to public has worked for several industries. However, in case of the real estate industry this route of fund raising has not yielded much result. While there are reasons ranging from poor performance of past issues to information asymmetry on account of the nature of this industry, the fact remains that IPO route is not a dependable option to raise finance and fund real estate development.

Just two companies managed to raise funds through this route in the last two years totaling to a paltry Rs.1.87 bn. The last two years have contributed less than 1% to the total IPO money raised by the industry in the last seven years highlighting the uncertainty of this source of funds. 

All of these factors have contributed to the shortage of fresh supply of houses and are also responsible for high property prices. At the same time, real estate is amongst the largest mainstream asset classes for investment, the report said. 

Hedge against inflation: The country has witnessed a high inflation environment. The CPI inflation consistently increased between 2007 and 2012 reaching a peak of 12%.

While it has come down in the last two years, at over 8% in 2012 it still remains above the comfort level of the central bank and continues to threaten household savings. In comparison the long term government of India bond yields approx. 8.09% clearly highlighting a near zero real rate of return. In contrast, over the long term hard assets like property appreciate in value in accordance to maintaining the purchasing power of the money. 

For instance, data for FTSE NAREIT (Represents all REIT’s listed in NYSE, AMEX, and NASDAQ) indicates that the dividend growth rate has surpassed the consumer price index in 18 annual periods out of the 20 since 1992. 

Income stability: Real estate is a productive asset and investors in REIT earn on account of both dividend and wealth accumulation.

Dividend accrues from the rentals of the property and wealth accumulation on account of capital appreciation of the underlying property. Consequently, REITs tend to generate a stable and consistent income stream for investors. In India, in case of commercial properties like office buildings and retail spaces the rental yield, hovers between 9-12% pa. and residential property averages around 2-3% pa. The data for FTSE NAREIT indicates that REITs have yielded an annual income component of 8.3% during 1972-2010, representing approximately 60 percent of the industry’s average annual total return of approximately 13.75%. Such annuity income lends stability to the investment and provides an income stream which has a significant value for a class of investors like retirees.

Enhanced Liquidity: The real estate sector lacks an efficient trading mechanism for purchase and sale of property. Hence, the asset is considered to be highly immovable and illiquid. However, REITs in the U.S. and many other parts of the world now make real estate investing easy and efficient, thanks to market liquidity. The units of companies that own portfolio of properties are bought and sold on major stock exchanges across the globe. This trading mechanism provides liquidity to this investment vehicle.

Corporate governance: The real estate sector is considered to be opaque and this information asymmetry pushes the investor on the fringes of the transaction. However, listed REITs are registered and regulated by the regulatory body and adhere to high standards of corporate governance, financial reporting and information disclosure. These factors result into increased transparency in this investment instrument.

Diversification: Diversification of investment portfolio helps to minimize risk. In case of a REIT the diversification benefits accrue on account of its low correlation with other asset classes. This has been the case with the US REIT market, which has witnessed a low correlation with other asset classes over a long term horizon. Hence, creating a portfolio with a combination of REIT along with other mainstream asset classes will lead to portfolio optimization.

High cost of property:Investing in real estate involves huge amount of capital. The high cost of residential and commercial property in the top urban centers like Delhi-NCR, Mumbai and Bangalore acts as a barrier for investors with small sums of investible surplus. While these cities present an extremely attractive real estate market, the high cost of real estate assets prohibit an individual investor from participating in this opportunity. Whereas, a REIT investment vehicle holds a portfolio of properties and allocates divisible units in smaller denominations making small investor participation possible.

Indian real estate must be given infrastructure status

The Indian real estate should be treated at par with other sectors like electricity, water, roads and highways within the scope of ‘infrastructure’ sector, and this will result in lower interest rates on loans and increased availability of banking and financial institutional funds to both developers and individuals, leading global real estate consultant has said.

In India, power, oil and gas, ports and shipping, roads and bridges, telecommunications, aviation and dams and irrigation canals are considered a part of the infrastructure sector. These have some common salient features that are critical for defining them as part of infrastructural sector. The real estate sector is quite analogous to infrastructure sector as it has similar characteristics and faces similar challenges and risks, according to Cushman & Wakefield.

“The RBI and the Government now must recognize the contribution of the Indian real estate sector to the economy. As an industry it provides substantial employment, capital generation and enables economic activities such as manufacturing, trading, services, etc. Hence, ensuring that the sector is provided with the similar benefits as provided to other infrastructure sectors such as roads, dams, airports, etc. will prove very beneficial to the Indian economy at large.

“The authorities must at least consider the case for such proactive measures to be taken to protect and boost the housing sector where their own assessments show that there is a current shortfall of 18.78 million units in urban India,” Sanjay Dutt, Executive Managing Director - South Asia.

Real estate construction is labour and capital intensive and the real estate and construction business is the second largest employer in the nation after agriculture. Significantly, real estate also forms the basic input for a variety of other sectors such as IT/ITeS, retail and trading, manufacturing, etc. and has a substantial multiplier effect on others sectors of the economy, the agency said, adding, “Therefore, any decline in construction may lead to adverse impacts on the Indian economy such as increased unemployment rates, reduced business investments, reduced off-takes on primary sectors such as mining and steel production, etc.”

The Indian real estate sector at present is facing challenges like increased land cost, delay in approvals, lack of availability of funds both at buyers’ and developers’ levels, under-developed infrastructure and skilled manpower. It has been a pressing demand from all the stakeholders in the real estate sector for the sector to be given the status of ‘infrastructure.’ Whilst it is the RBI’s prerogative to grant this status, it is also up to the Government to recommend and push for this.

Listing other benefits of infrastructure status to real estate sector, the report said, “Though 100% FDI is allowed in the real estate sector, subject to certain norms and there have been some FDI inflows, this move would attract more FDI into the sector as investors would take note of the special status given to the sector, which assures them about the safety of their investments.”

Currently, the real estate sector’s contribution to the GDP is merely 5%; lower than the average contribution of developed countries like France, UK and Australia having modern infrastructure and well developed real estate market. The share of real estate in China is close to 12%. China has taken large strides in infrastructure and real estate in the last few decades, which in turn has propelled high GDP growth rates in the last few years. Following China’s example, developing countries like Indonesia, Argentina and Spain, to name a few, are consciously striving for a higher GDP contribution from real estate.