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The real estate sector in India is the second-highest employment generator after agriculture. The real estate sector will reach US$ 1 trillion in market size by 2030, up from US$ 200 billion in 2021, and contribute 13% to the country’s GDP by 2025.
This sector needs to be accountable to its stakeholders, as it will be a major driving force of the economy. Transparency is a very important factor that drives trust in buyers. Better legislation and improved access to independent market data enable ordinary individuals to demand higher safety standards in buildings and feel more confident in home-buying decisions.
The emergence of nuclear families, rapid urbanisation, and rising household income are likely to remain the key drivers for growth in all spheres of real estate, including residential, commercial, and retail. The sector’s share in India’s GDP will double by 2025 and will help create many employment opportunities.
The opacity of Residential Real Estate
Transparency in residential real estate markets has improved at its slowest pace in nearly a decade at a time of rising expectations for higher standards. The absence of a normalisation process fans the fire. The housing market in India needs to be more balanced, organised, and administered by updated regulations.
In the residential real estate industry, transparency should be the norm, not the exception. Clarity, fuelled by transparency, benefits everyone involved, including the buyer, the seller, and the investors. A combination of PropTech and new data, sustainability initiatives, and anti-money laundering regulations can boost transparency.
The sentiment-driven housing market in India
Individual sentiments intensely determine land valuation. For example, rental costs are not commonly tracked, although they are considered an important indicator of economic well-being in many countries.
The prolonged pandemic has exacerbated the liquidity crisis in the industry, making it hard for developers to secure the required financing. Banks have set rigid conditions for real estate lending, and some non-banking financial organisations (NBFOs) are lending selectively.
To provide industry players with accurate data, we urgently need initiatives to create reliable industry-wide datasets and digitised land records. We also need policies to improve sales forecasting, resulting in revenue and the likelihood of liquidity dry spells.
Developers are super aggregators in the housing market in India
Unlike other asset classes, real estate is a much higher involvement product and a heterogeneous asset class. Home search, selection, unit choice, legal paperwork, cyclic payments, mortgage, and associated tax benefits all come into play for a home seeker.
Super aggregators are significant players in the Indian housing market, as they offer an all-in-one resource for all your housing needs. They provide a platform for buyers and sellers to interact and handle transactions. Aggregators are platform providers that offer consumers comparative summaries of the best solutions in the market, fine-tuned to their search filters.
Evaluating the financial soundness of super aggregators is quite challenging for the Indian housing markets. Super aggregators have an ever-evolving business model. There are numerous factors to consider, such as the organization’s financial stability, its history in the market, and the quality of its products and services.
The Road Ahead is long for the Real Estate Industry
Demand for residential real estate has surged due to rapid urbanisation and growing household income. India is among the top 10 price-appreciating real estate markets internationally. Developers, to attract funding, have revamped their accounting and management strategies to meet due diligence standards. Indian real estate is expected to attract substantial FDI in the coming years.
We should have the ability to identify opportunities in the current economic climate, analyse data, and adjust strategies to maximise returns. We need a solid understanding of capital markets and the ability to assess projects and accurately determine the appropriate risk-reward ratios.
The primary goal of real estate asset management is to maximise overall investment returns. This objective is accomplished through smart strategies: pursuing high returns, reducing expenditures, managing risk, and building the portfolio. With real estate in mind, many of these tactics result in increased property value, rental rates, or other forms of return. Asset managers frequently possess strong negotiating, deal-making, and property analysis skills. In essence, asset management uses various channels to improve the performance of a portfolio of investments.
Sticking to old ways of thinking will prevent the sector from developing in the short term. This is where Integrow comes in with a fresh and new perspective.
Founded on the principles of trust and openness, Integrow is a reputable and reliable Real Estate Focused Asset Management Company with a vision of transforming real estate democratisation based on authenticity and transparency.
Note: This article was originally written by Mr.Ramashrya Yadav, an expert in the field of real estate and a contributing writer on the topic.