Top 4 Reforms that will Transform Indian Real Estate Sector

Real estate is undoubtedly the most important sector of the Indian economy. In recent few years, the sector has witnessed major changes in terms of reforms set by the authorities and has certainly affected the demand and supply from both, buyers and developers side. Real estate is the second largest employment producer, first is the agriculture. Recently, India stood fourth in developing Asia for FDI inflows, the report created by World Investment Report 2016 by the United Nations Conference for Trade and Development.  

During the last 3 years, the centre government has progressively approached real estate with its various reforms including the RERA and GST. Moreover, by inviting FDI, it has further boosted the sector. However, these are not the only steps taken, there are other reforms too considered to push the sector ahead formally.

One of the major reforms by the centre is Pradhan Mantri Awas Yojna- Housing for all which is the ambitious project with the mission of Housing for all by 2022, which will tackle the problem of housing shortage of 20 million homes in India. It has the target of completing 1 crore homes by 2018, and the government is giving equal importance to the rural housing budgetary allocation. The current allocation is about 23,000 crore.

Let us check some 4 important reforms that transformed the Indian real estate sector:

1. Land Acquisition and Digitisation of Ownership Records made Easier:

Inaccurate long data records, unclear land titles and non-availability of contiguous land made the whole land acquisition process hectic. To overcome these issues, implementing of effective policy on land pooling will lead to adequate incentives from smallholders and sell the aggregate land parcels. Moreover, with the digitisation and dematerialisation of land records, it becomes much easier to keep the records safely. Digitisation will also pave the way to attract title insurance companies

2. Real Estate Regulation and Development Act-2016 (RERA):

This is the landmark reform by the centre government to bring down irregularities in the sector. Home buyers usually faced issues regarding the late possession of the house and illegal project building by the developer. So to boost the confidence of investors and homebuyers, RERA was introduced where the developer has to register on-going project giving the details of the project completion and amenities offered. The act will encourage unorganised real estate sector, thus infusing credibility and accountability.

3. Standardisation of Documentation and Construction Norms:

There is a layer of complexity in the documentation which needs to be standardised. Moreover, standardizing the construction norms including the fire safety, material used and other things are essential. Every real estate developer has to follow norms of National Building Code of India (NBC).Both, the home buyer and the developer need to work collectively towards the standardizing the process.

4. Real Estate Investment Trusts (REITs) -

This is yet another key initiative undertaken by the authority to trigger demand for office space and consumer goods. This also includes IT, financial service sectors and others to streamline the commercial sector which is largely unorganised. Standardizing the commercial space sector will certainly boost more investment from commercial business owners.

Conclusion:

The combined effect of these reforms along with GST, demonetisation and other reforms will lead to property becoming affordable for the investor. It would be exciting to see how these reforms will change the face of real estate sector.