- For the rest of emerging Asia, real estate regulations are still in the nascent stages of their modernization. India has a headstart in this respect. Reforms such as the very successful implementation of the REIT framework has set India apart. Additionally, the long-term structural drivers of emerging markets - from a rapidly growing middle class, massive infrastructure developments, favourable demographics, the adoption of ecommerce - remain intact.
- On-shore REIT creates a huge secondary market of capital for real estate developers and investors. Some recent big-ticket transactions is a sign of trust that foreign investors have reposed in Indian commercial real estate, given the inherent demand. We need to ensure that the investment pipeline is clear for the launch of 4-5 large REITs in the near future
- Megatrends for India : Session by Dr. Ajit Ranade
- Demography - On a longer term, younger working class is growing in India at 2-3% YOY and Female participation in workforce has also increased
- Urbanization - More than 50% of global population is living in urban areas, similar trend being observed in India
- Digital revolution - India is leading in digital identity (Aadhar), and Smartphone users. UPI users raked in INR 2billion in transaction last month. Contribution of digital economy can reach 20-25% of GDP
- Infrastructure - INR 50 trillion spending on construction is expected. 60% on infra, remaining on commercial & residential real estate
- Climate change - Economic activity is impacted by climate change, which investors and developers also need to account for
- Reforms - Introduction of RERA and Reduction in stamp duty has been a positive step in governance
- As per the latest data released by Government, $1.4 trillion investment is expected to come into the Infrastructure segment in India. Other larger development areas in India includes - 100 new airports lined up, Largest amount of road construction in the world, the Metro construction of 1500 KM is in progress, which is enormous compared to around 400 KMS. of London metro
- REITs are attracting billions of dollars and performing well as a start. 2 back to back successful REITs launches is indication of good investor faith in this sector.
- Commercial real estate has shown good resilience in spite of challenges. Despite covid, the rent collections were on track.
- Mr Keki Mistry, Vice Chairman and CEO, HDFC Limited said The home loan rates have been the lowest in the last four decades. For the next six to 12 months, the benign interest rates environment will continue. The growth in the economy and the real estate has been sharp. The factors like the RBI infusing much needed liquidity into the sector, various concessions given by the Government and the developers like the stamp duty relaxations have extended the best buying opportunity for the homebuyers. The trend will continue with the lowest interest rates regime
Mr Anuj Puri said, about 23 million sqft of new office space leasing is expected while the REITs will continue to attract foreign investments. He informed that the rent collection has been between 97 % to 99.5% during the April to October period that indicated a revival in the office segment. “The joint efforts of APREA and NAREDCO in liasioning with the Government to boost the REITs framework in the country have driven heavy investments in this segment,” said Mr Puri.
He further observed that the residential realty was lacking liquidity and the gap could be well filled up by the private equity funding, for which the realty sector needed to have a meaningful dialogue with the Government to attract private equity investments into this segment.
Mr Neel Raheja, President, K Raheja Corp indicated that, “The start of the pandemic saw a few months of zero sales but soon people realized the value of owning a home which saw a severe turnaround. The volume will increase in the coming months and we expect the momentum to continue.”
“On the commercial front, we can see 75-80% of the demand for offices is coming from the global companies. People cannot continue to work from home for a longer period of time and we expect the commercial market to be back once things start to move slowly,” he further added.
Mr Vikram Garg, Managing Director, Blackstone observed that as the global interest rates have been low, the global fund managers are bullish on the country like India. The domestic individuals have founded a great investment class, which has created large investment opportunities as a saving instrument.
APREA believes the market capitalization for the Asia Pacific (APAC) real estate markets has grown over 400% in the last 15 years and have outperformed the broader markets in the past 20 years with increasing participation from institutional investors.
Mr.Chanakya Chakravarti, Managing Director India, Ivanhoé Cambridge, “Significant funding transactions in the last three months a sign of confidence of global funds. The office realty segment will see some disruptions in the coming days. The investors will now look for longer stay to bring more capital into the sector.” Mr. Ashish Singh, Partner Real Estate, Actis, noted that the post GST era had created a large proportion of capital to bring the sector out of a negative yield terriorty. He predicted that the office segment will become a matured asset class of yield for the investors.
After the affordable rental housing policy, the Government is now eyeing to push the growth of affordable rental housing segment by modifying the age – old Tenancy Act by implementing the new Model Tenancy Act by removing the complexities and restrictions on the existing rent control laws to increase the supply of affordable housig supply, announced Shri Durga Shankar Mishra, Secretary, Ministry of Housing and Urban Affairs, Government of India
The Government would ask other financial institutes to open up the financing avenues on the lines of SWAMIH Fund to provide priority debt financing for the completion of stalled housing projects, revealed Shri Hardeep Shri Hardeep Singh Puri Minister of State (Independent Charge) of the Ministry of Housing and Urban Affairs; Minister of State (Independent Charge) of the Ministry of Civil Aviation; and Minister of State in the Ministry of Commerce and Industry. “There was a proposal that the real estate needed a different asset class, please send a note and we will push this forward,” he said. - The volumes in the real estate are increasing due to effective measures such as stamp duty reduction, rationalisation of GST and other reforms. A further rationalisation of GST and the initiatives like stamp duty reduction will help to attract more investments.
- Resi - zero-stamp duty pushed Mumbai’s residential realty sales by 300 percent from August to October, 2020.
- Community Living is an innovative model of residential accommodation that has become an international movement, which aims to find answers to the global housing crisis
