By Accommodation Times News Service
In the inaugural session of Natcon 2013, one of the CREDAI’s flagship real estate event happened in Moscow on 27 Housing and Urban Poverty Alleviation, Government of India released a joint report by CBRE & CREDAI titled “Assessing the Economic Impact of India’s Real Estate Sector’.
This very special research report provides a broad view of the extent of economic opportunities generated by the real estate and construction sector in the country. According to research conducted, India’s real estate sector is estimated to have a total supply pipeline of close to 3.6 billion sq ft lined up for completion in the year 2013, with about 98% of this being concentrated in the residential segment. Stating further the report states, The Indian real estate and construction industry is an integral part of the economy and plays
an important role in the development of the country’s infrastructure base and is one of the largest generators of economic activity. The construction sector has strong linkages with various industries such as cement, steel, chemicals, paints, tiles, fixtures and fittings, etc.
The real estate sector is an important component of the construction industry and serves as a propeller for private sector involvement in growth of the country’s built environment. Lalit Jain, Chairman, CREDAI and CMD, Kumar Urban Development Ltd. added, “ The report portrays the conservative status of the sector’s contribution. For the first time a
detailed attempt has been made to give facts on its importance in terms of GDP , industrial production employment opportunities. Prospects of the sector has potential to accelerate growth. The projection given can be accelerated if reforms are implemented.”
India has witnessed strong economic growth in the last decade primarily on account of economic reforms that ushered in an era of liberalization and provided for increased participation from the private sector. Opening up of the economy for investment was instrumental in spurring broad-based fundamental growth across various sectors, thereby leading to accelerated consumption and heightened investment activity in the economy.
This growth has percolated to the construction and real estate industry as well, which is a conduit for growth in a large number of ancillary industries in the country. As per the report, the total economic footprint generated by the construction of this real estate pipeline will require a total investment of about INR 254,000 crores, will help generate revenues worth INR 370,000 crores, and provide employment to about 7.6 million people across the country in 2013. The total contribution of the real estate sector to the
national GDP has been estimated to be about 6.3% in 2013 alone.
Yet, this footprint is restricted by numerous challenges inhibiting the sector such as high borrowing costs, lack of institutional funding, lengthy approval processes and slow & uneven infrastructure development. Once these bottlenecks are addressed, we can expect the economic contribution of the sector to increase considerably, with its share of the GDPth July 2013 Dr. (Kum.) Girija Vyas, Honorable Minister of to more than double from 6.3% in 2013 to almost 13% by 2025. With the removal of the inherent bottlenecks present in the sector, the long term prospects appear highly positive
for the sector, with a potential increase in completed space from 3.6 billion sqft in 2013 to about 8.2 billion sq ft in 2025. This will generate significant employment opportunities, with annual employment expected to increase from 7.6 million in 2013 to almost 17 million in 2025, thereby providing substantial socio-economic opportunities for growth in the country
However, this expansion of the real estate sector could happen before 2025, if the government provides relevant policy measures to create a more conducive environment for growth in the sector. The CBRE report lists a set of recommendations which could assist the sector in achieving its full potential in the long term. These include measures such as addressing supply constraints, streamlining the approval processes, permitting new sources
of real estate funding and promoting private sector participation in the construction sector. An effective implementation of these recommendations will undeniably push the growth of
the sector to a higher trajectory.