Growth Unleashed
Real Estate

Growth Unleashed

Policy paralysis is a thing of the past. The correct regulatory environment has fallen into place, and India Inc is now raring to go, says SATYAKUMAR SHETTY.

India is not only the world´s biggest democracy; it is a vibrant and confident country taking positive steps to invest in its future. This growth programme is driving major change, creating jobs and stimulating significant opportunities for investment. This is particularly true of real estate and infrastructure. At present, they are facing the challenges of stagnation, with the overall global economic climate contributing to stalled or slow growth. The future looks positive and resurgence is expected in the coming months and years. With real estate for instance - a sector comprising housing, retail, hospitality and commercial- problems of policy-making and regulation which have acted as a burden in the past have been overcome, leading to optimistic predictions for the future.

Immense potential
Business projections are encouraging. Housing contributes between 5-6 per cent of GDP, and the Indian real estate market is expected to reach $180 billion by 2020. It has been helpful to see that limits on foreign direct investment, which accounted for more than $24 billion in the years from 2000 to the present, have been removed.

There are plenty of large-scale initiatives offering real promise for real estate companies. For instance, the Indian Government has been working with the state governments to encourage development. One of the most exciting opportunities is the Smart Cities project - a hugely ambitious plan to build 100 of these. With half of the country´s population set to be city environments by 2030 - the current figure is 31 per cent - the aim is to drive economic growth and improve the quality of life for inhabitants by leveraging local developments and using technology to create smart outcomes.

Other initiatives include Make in India, launched in 2014 with the aim of transforming the country into a global design and manufacturing hub. This has helped to accelerate commercial property leasing.

Another programme, Housing for All, started last year, is planning to build 30 million houses, mainly for economically-weaker sections of society and low-income groups, by 2022. This will be achieved through PPP and income subsidy.

Legislation, too, should have a positive effect on the sector. This year, the Rajya Sabha passed the Real Estate (Regulation and Development) Bill. This legislation aims to protect consumer interests, ensure efficiency in all property-related transactions, improve the accountability of developers, increase transparency and attract more investments.

Other measures include implementation of the Goods and Services Act. This will be a major change, providing for a uniform tax code, and will be helpful in the long run. SEBI has also notified final regulations which will govern REITs and InvITs. These will enable easier access to funds for cash-strapped developers and create a new investment route for institutions and high net worth individuals. In time, it should also allow ordinary investors to commit funds to real estate.

Historic issues with policy and regulatory regimes have also been addressed in the infrastructure sector. Again, there is an optimistic outlook: India needs a massive Rs 31 trillion ($454.83 billion) to be spent in this area over the next five years. Some 70 per cent of this infrastructure spend is needed for power, roads and urban projects. With the opening up of FDI, this is on track to happen. Direct financial contributions are also coming from government-to-government initiatives. There is huge potential for PPP involvement, and the power sector alone has an investment potential of $250 billion over the next four to five years in areas such as generation, distribution, transmission and equipment.

The Indian construction equipment industry is now picking up after a five-year downturn. It currently stands at a value of $2.8 billion, but is expected to nearly double to $5 billion by FY2019-20.

Government initiatives to stimulate the infrastructure sector include a plan to launch a National Infrastructure Investment Fund (NIFF) with an initial investment of $5.87 billion. In addition, SEBI has announced units of InvITs to help infrastructure developers raise capital from public investors. The Budget for 2015-16 saw capital outlays for roads increased by Rs 140.3 billion ($2.05 billion). For railways, the increase has been Rs 100.5 billion ($1.47 billion). As one of the world´s most populous countries prepares itself for the rest of the 21st century, resurgence seems set to create major real estate and infrastructure opportunities. The industry is ready, waiting and eager to embrace the potential ahead.

About the author:
Satyakumar Shetty, COO (India and South Asia), Currie & Brown (India), holds a BE degree with honors in the construction field. In his tenure of 25 years, he has gathered vast experience in the field of projects, cost and contract management, and has been involved in all types of sector development.

Policy paralysis is a thing of the past. The correct regulatory environment has fallen into place, and India Inc is now raring to go, says SATYAKUMAR SHETTY. India is not only the world´s biggest democracy; it is a vibrant and confident country taking positive steps to invest in its future. This growth programme is driving major change, creating jobs and stimulating significant opportunities for investment. This is particularly true of real estate and infrastructure. At present, they are facing the challenges of stagnation, with the overall global economic climate contributing to stalled or slow growth. The future looks positive and resurgence is expected in the coming months and years. With real estate for instance - a sector comprising housing, retail, hospitality and commercial- problems of policy-making and regulation which have acted as a burden in the past have been overcome, leading to optimistic predictions for the future. Immense potential Business projections are encouraging. Housing contributes between 5-6 per cent of GDP, and the Indian real estate market is expected to reach $180 billion by 2020. It has been helpful to see that limits on foreign direct investment, which accounted for more than $24 billion in the years from 2000 to the present, have been removed. There are plenty of large-scale initiatives offering real promise for real estate companies. For instance, the Indian Government has been working with the state governments to encourage development. One of the most exciting opportunities is the Smart Cities project - a hugely ambitious plan to build 100 of these. With half of the country´s population set to be city environments by 2030 - the current figure is 31 per cent - the aim is to drive economic growth and improve the quality of life for inhabitants by leveraging local developments and using technology to create smart outcomes. Other initiatives include Make in India, launched in 2014 with the aim of transforming the country into a global design and manufacturing hub. This has helped to accelerate commercial property leasing. Another programme, Housing for All, started last year, is planning to build 30 million houses, mainly for economically-weaker sections of society and low-income groups, by 2022. This will be achieved through PPP and income subsidy. Legislation, too, should have a positive effect on the sector. This year, the Rajya Sabha passed the Real Estate (Regulation and Development) Bill. This legislation aims to protect consumer interests, ensure efficiency in all property-related transactions, improve the accountability of developers, increase transparency and attract more investments. Other measures include implementation of the Goods and Services Act. This will be a major change, providing for a uniform tax code, and will be helpful in the long run. SEBI has also notified final regulations which will govern REITs and InvITs. These will enable easier access to funds for cash-strapped developers and create a new investment route for institutions and high net worth individuals. In time, it should also allow ordinary investors to commit funds to real estate. Historic issues with policy and regulatory regimes have also been addressed in the infrastructure sector. Again, there is an optimistic outlook: India needs a massive Rs 31 trillion ($454.83 billion) to be spent in this area over the next five years. Some 70 per cent of this infrastructure spend is needed for power, roads and urban projects. With the opening up of FDI, this is on track to happen. Direct financial contributions are also coming from government-to-government initiatives. There is huge potential for PPP involvement, and the power sector alone has an investment potential of $250 billion over the next four to five years in areas such as generation, distribution, transmission and equipment. The Indian construction equipment industry is now picking up after a five-year downturn. It currently stands at a value of $2.8 billion, but is expected to nearly double to $5 billion by FY2019-20. Government initiatives to stimulate the infrastructure sector include a plan to launch a National Infrastructure Investment Fund (NIFF) with an initial investment of $5.87 billion. In addition, SEBI has announced units of InvITs to help infrastructure developers raise capital from public investors. The Budget for 2015-16 saw capital outlays for roads increased by Rs 140.3 billion ($2.05 billion). For railways, the increase has been Rs 100.5 billion ($1.47 billion). As one of the world´s most populous countries prepares itself for the rest of the 21st century, resurgence seems set to create major real estate and infrastructure opportunities. The industry is ready, waiting and eager to embrace the potential ahead. About the author: Satyakumar Shetty, COO (India and South Asia), Currie & Brown (India), holds a BE degree with honors in the construction field. In his tenure of 25 years, he has gathered vast experience in the field of projects, cost and contract management, and has been involved in all types of sector development.

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