Recovery of Indian Real Estate

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Posted by : Pooja Agrawal on | Jun 27,2019

The real estate sector in India is not as impressive as it used to be during the last decade. The increased costs of the financing were one of the reasons behind its collapse. When we look at the system that governed the regulatory mechanism of this industry we could observe that the projects took a long time to complete as several publicly traded real estate developers were in debt. The market was and still is full of unsold inventory which puts a major impact on the industry.

 

A 100% direct foreign investment in construction and development projects was allowed by the Indian Government in an attempt to raise the real estate market and satisfy the needs of the consumers. The banking sector suffered from a heavy cost of funds due to the increased bank rate to 10.25%.

 

The only thing that could save this industry was selling off all the unsold inventory that would cover up the losses and the debts incurred by the big real estate giants. However, this still would have to go through a vague observational process that is followed by the inefficient system. So in order to deal with this, the government enacted a system called RERA or Real Estate (Regulation and Development) Act in 2016 that would bring transparency, accountability and financial discipline for the betterment of the real estate sector.

 

The government also passed certain provisions in order to promote the home buying interests across the multitudes of people in major cities. Such provisions helped out the real estate industry which is now has stabilized. Organizations such as HomeCapital have also started enabling young buyers to take an interest in buying their own home at a very early stage of life. This, in turn, helps the industry by bringing more prospective buyers ensuring that the cycle of supply and demand goes on.

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