Synopsis: Indian Real Estate- Opening Doors (Part 3)

So far, we have looked at how real estate in India has shaped up in the last decade and how is the industry looking up to an exponential growth in the years that follow. In this article, we shall focus on how Indian realty sector has opened up floodgates for global investors and the challenges that the sector still needs to overcome.

As the Indian real estate sector heads for massive growth, it opens up plethora of opportunities for global investors, engineers, architects, vendors, suppliers, infrastructure consultants and many others. India currently lacks the requisite skill set and expertise to meet up the dynamic demand of the sector. The gap between demand and supply of real estate units is therefore getting difficult to bridge which raises the need for intervention by foreign experts. Business opportunities have thus opened for below mentioned foreign participants.

• Developers and investors – With the relaxation in FDI policy and government becoming more open to FDI in flow, it has become relatively easier for global investors to invest in Indian real estate sector, few renowned names being Blackstone, Abu Dhabi Investments and Qatar Investment Authority.

• Architects, designers, engineering and construction companies –India is in need of architects who can come up with innovative designs that are unique to every high end project such as luxury residencies and golf townships.

 

Similarly, developers in India are looking for engineering and construction companies who can reduce cost, reduce wastages and automate projects and bring down the turn-around time. Such services are currently scarce in India leading to opportunities for global companies.

• Project management consultants – Developers now prefer an end to end solution provider right from cost management to ensuring safety and standards and timely completion of project. Expert firms such as MACE, Parson Brinkerhoff and Louis Berger have taken this opportunity and entered the Indian markets.

• Suppliers and Facilities management service providers–Right from buying high quality material from global vendors to outsourcing someone who can provide a complete range of facility management services, every space is being ventured into by global firms.

Despite of the visible potential of Indian realty sector, the challenges are grave and difficult to overcome. They include:-

• Lack of suitable land for development due to rapid urbanization and steep rise in prices of urban land.

• Difficult and time taking regulatory processes that cause unnecessary hurdle for developers. The total numbers of permits for developing a property are 34 taking over 227 days for clearance.

• Lack of integrated land policy causing issue in getting clear land titles which makes the developer go through the tough process of litigation.

• Difficulty in arranging for initial funding due to strict funding norms and expensive interest rates.

• Manpower shortage leading to delay in completion of projects and delayed timelines.

Speaking of the above challenges, it would be unfair to say that government is not doing its bit to overcome it. The Indian government has realized that urbanization is imperative and investing heavily in infrastructure is the need for a robust economic growth. It is thus coming up with various reforms and policies to overcome the issues faced so far to make the industry a game changer for the country.