In the upcoming Union Budget 2022-23, some significant moves could help spur up residential demand
Reviewing the overall performance of the Indian residential real estate market in 2021 shows a definite upswing. Between Jan - Sep 2021, 1.63 lakh units of new residential supply were added across the top 7 Indian cities - 27% higher than 2020 full year supply - and 1.45 lakh units were sold - 5% higher than in the whole of 2020.
Over USD 26 billion of FDI in the construction development between April 2000 and June 2021, massive infrastructure spending of USD 1.35 trillion, and a buzzing IPO market that had raised over INR 42,000 crores in the past 3 years have been strong enablers of growth.
At least 67% (or approx. USD 67 bn) of the total loan advances (USD 100 bn) to Indian real estate by banks, NBFCs and HFCs is currently completely stress-free, reveals the latest study by ANAROCK Capital. Another 15% (approx. USD 15 bn) is under some pressure but has scope for resolution with certainty on at least the principal amount.
Though FY21 was an unprecedented year due to the pandemic, foreign PE funds showed much optimism for India. As much as 93% of the total PE investments pumped into Indian real estate was by foreign investors.
Union Budget 2021-22 was broad-based with special emphasis on building robust healthcare infrastructure, physical infrastructure and affordable housing. It will result in job creation in the informal sector, which was severely impacted by the pandemic
The government’s SWAMIH Fund has already sanctioned INR 12,079 Cr for over 81,000 units across 123 projects in the country
The housing industry needs focused measures to further bolster demand in 2021. This year, the demands go beyond the usual suspects of single-window clearance and industry status.
On an average, 1/3rd of the overall project cost a real estate developer incurs in Mumbai goes towards various premiums. In one notable case, for a plot of land valued at INR 5 crore in Bandra, the developer had to pay premiums to the tune of approx. INR 6 crore to the BMC.
These funds constitute a major relief for cash-starved residential real estate developers – and all other related industry stakeholders, including aggrieved homebuyers.