Indian realty sector projects investor-friendly image

A favourable regulatory environment and attractive asset valuations are enhancing investor confidence by changing the perception of Indian realty in the global arena, a new official report reveals. The Confederation of Real Estate Developers' Association of India (CREDAI), the apex body for private real estate developers in India representing 11,940 developers across 23 states and 171 city chapters across the country, held its annual national convention (NATCON) in London recently to project the sector's increasingly investor-friendly image. In collaboration with the CBRE Group, a Fortune 500 company headquartered in Los Angeles and the world's largest commercial real estate services and investment firm, it launched a new report titled 'Indian Real Estate in 2017 and Beyond'. The report encapsulates the major policy related disruptions by the government of India which are challenging the traditional operating environment in the Indian realty segment. It highlights a cocktail of measures like the Real Estate Regulatory Agency (RERA), Goods and Services Tax (GST) and Real Estate Investment Trusts (REITs) which are aimed at improving transparency in the sector, increasing the share of the organised segment and enhancing the overall investor sentiment. The combined measures will help catalyse ease of doing business in the country while supporting corporate entities entering or expanding their footprint in India. Jaxay Shah, President, CREDAI National, said: “The government's aggressive push to formalise, regulate and encourage investment in the sector with a slew of measures like RERA and REITs is consolidating India's position on the global map. We believe that these disruptions and encouraging trends will definitely manifest a more exciting future which will be full of possibilities and opportunities for Indian real estate.” The new report tabulates breakthrough disruptions across what it terms as four cornerstones for the sector - Regulation, Finance, Customers and Technology. These disruptions are likely to have a positive impact and facilitate a more conducive ecosystem. With a series of reforms, the Indian government has taken a lead in challenging the operating fabric and made affordable housing the growth catalyst in the residential segment. The report further highlights growing investor confidence, evident from an unprecedented interest from offshore equity investors, large Indian corporates and high net worth individuals (HNIs) - roughly estimated to hit $7 billion in 2017. Furthermore, while the office and residential segments are expected to remain the traditional drivers for the industry, alternate sectors such as retail and warehousing will also come to the forefront. India is also witnessing significant changes in customer preferences in office, retail, residential and warehousing space. For instance, the dynamics in office spaces are being disrupted with the entry of millennials - over two-thirds of Indian millennials feel the quality of their office design impacts their productivity to a large extent. In the warehousing segment, the entry of international players is ensuring that better and larger warehouses emerge in key markets. In the residential segment, customers will have a say in operations with effective grievance redressal. Customer experience has also taken centre-stage in retail strategy, which is fuelling future trends such as customisation and hyper customisation. As per a survey conducted by CREDAI and CBRE, more than 40 per cent of retailers in cities such as Noida, Gurgaon, Delhi, Mumbai and Kolkata prefer locating in malls as so-called experience destinations. Anshuman Magazine, chairman, India & South East Asia, CBRE, explained: “In this burgeoning Indian economy, the one sector that has emerged from the restraints of the past is real estate. The real estate sector in India is one of the key contributors and mainstays for India's development as a nation. “Real estate in India continues to be in a dynamic phase and the pace at which the four cornerstones - Regulation, Finance, Customers and Technology - are evolving, a more than incremental transformation in the sector is expected in the coming years. In this report, we have dwelled on how a strong foundation for this change has already been laid with a conducive operating environment, the future growth of the sector will be determined by many other factors”. The report concludes with the observation that new disruptions in technology are paramount over all other cornerstones. The report notes: “The fourth cornerstone, Technology, has come into sharper focus more recently. Moving away from times where technology was only relevant for specific sectors, today it is being used as an important tool to ensure seamless integration with the other cornerstones of real estate (Regulation, Finance and Customers). “With simple steps such as online registration of developers under RERA, GST rate finder app, to the more complex implications such as automation and robotics in the office segment, technology is the common thread that binds all the real estate segments. “In all, the changes being witnessed by each of these cornerstones are likely to be positive for the sector and will help in shaping a real estate ecosystem, that is at par with the real estate environment in major economies of the world.” *'Indian Real Estate in 2017 and Beyond' can be accessed here