NEW DELHI: The Indian real estate market is estimated to touch USD 1 trillion by 2030 driven by rising demand and various reforms in the past seven years like new realty law RERA, Housing and Urban Affairs Secretary Durga Shanker Mishra said on Wednesday.
The number of people employed in the sector is also expected to rise to 7 crore in coming years, from 5.5 crore in 2019, he said while addressing a CII event on the real estate sector.
The secretary further said that the states have been asked to soon implement the Model Tenancy Act, which was passed by the Union Cabinet in June this year.
Mishra also clarified that the law once implemented by the states will be prospective in nature and all disputes related to rent agreements will be dealt under the old laws of respective states.
He pointed out that the real estate sector suffered a “setback” during the first and second wave of the COVID-19 pandemic but said the housing demand has revived.
“The size of the real estate sector was around USD 200 billion 2-3 years ago. We expect the real estate market to touch USD 1 trillion by 2030,” the housing secretary said.
“It is not mere talk and guess work. The trend clearly shows that the real estate sector of our country will touch the figure of USD 1 trillion in the next 7-8 years,” Mishra said, while emphasising the importance of this industry in the Indian economy.
Citing various reports of property consultants, the secretary said housing demand in the first quarter of this fiscal year has risen as compared to the year-ago period.
Talking about the importance of this sector in employment generation, he said: “Around 5.5 crore people were employed in the sector as per 2019 figure. Our predictions for the future is that around 7 crore people will be employed in this industry.”
That apart, Mishra said the real estate sector creates demand for about 270 other industries, including cement and steel.
“Therefore, real estate is an important sector of the economy. Nobody should have any doubt about it,” he stressed.
Hence, Mishra said, the government has given a lot of focus on this sector in the past seven years and has taken measures in every budget since 2014.
The secretary said it is estimated that around 88 crore people will be living in urban areas by 2051 as against the current 46 crore, creating huge potential for real estate development.
Describing the enactment of new realty law RERA as the biggest reform, he said the new legislation has taken the industry to another level.
“RERA has transformed this sector and changed the perception of this industry. Consumers now have confidence that their investments are safe,” Mishra said.
Sharing the success story of RERA, he said around 67,000 projects and 52,000 property agents are registered under this law. More than 70,000 cases have been disposed of by the real estate authorities established under this law.
All states, except West Bengal have implemented this law, he said, adding that the ministry has written to the state government regarding this.
He listed Model Tenancy Act as another reform that would create a lot of demand for rental housing in the country.
The secretary said the ministry has asked all states to implement this law at the earliest.
Referring to media reports raising concerns related to the fate of traditional ‘Pagdi agreements’ in Mumbai, Mishra said the new law will be prospective and not retrospective.
Therefore, he said the existing rent agreements will not come under its ambit. “It will be prospective in nature.”
The provisions of this Model Tenancy Act clearly mention that all disputes related to existing rent agreements will be dealt under the old laws even after their repealment, the secretary emphasised.
Mishra also talked about reforms for ease of doing business in the real estate sector.
He said the government has taken steps to provide online permission for construction, which will eliminate delays and corrupt practices.
The secretary highlighted other reforms like introduction of Real Estate Investment Trust (REIT) and the launch of stress fund named SWAMIH to complete stalled housing projects.
Mishra said the Affordable Rental Housing Complex (ARHC) scheme launched by the government to develop homes for migrant workers will also create business opportunities for the sector.
The secretary asked the real estate industry to focus on affordability of residential properties to attract buyers from lower and middle income group.
Neel Raheja, Co-Chair, CII National Committee on Real Estate and Housing and Group President of K Raheja Corp, talked about high government charges and finance cost in the sector that impacts affordability.
Anshuman Magazine, Deputy Chairman of CII Northern Region and Chairman and CEO – India, SE Asia, Middle East & Africa at CBRE, expressed confidence about the future growth of all the segments of the real estate sector.
Mohit Malhotra, Managing Director & CEO of Godrej Properties Ltd, said the industry needs to attract equity capital to fuel growth. He also stressed on improving productivity by use of latest technology.
Malhotra said the real estate sector is getting consolidated from highly fragmented.
Amit Gossain, Chairman, CII Urban Development and Smart Cities Council and Managing Director of KONE Elevators India Ltd, said the COVID-19 pandemic has brought “short-term blip” in the sector and felt that long-term growth potential remains intact.