It’s not a fact. There is indeed a sense that the Indian Real Estate Sector is struggling and must be revived swiftly. In the wake of the Demonetization of the highly valued Indian Currency, this sector, which is primarily cash-driven, declined to the point that the number of transactions and transactions executed decreased by 50% percent.
Additionally, the sector is also stricken by the well-intentioned, however ill-conceived implementation of RERA, also known as RERA or the Real Estate Regulation Act, which was enacted through the Indian Government in order to bring more transparency and accountability to the real estate business in India.
In fact, it could be asserted that measures were an ominous double blow to an industry that was struggling with headwinds from the overcapacity of its facilities and financial problems.
This is why it is the argument in this piece that there should be swift actions taken to revitalize this sector. Indian Real Estate Sector, in case for nothing else however, to further the goals of the government in creating affordable housing for everyone by 2022.
Structural Problems Need Radical Solutions
As we have mentioned the main problem that is afflicting that sector is Indian Real Estate Sector is structural. This means that because of the fact that it is a cash-driven industry and the means of financing of which are usually from questionable sources, and the absence of Transparency and Accountability, this sector is not like typical of advanced economies, where these issues are either non-existent or handled well.
This contrasts with that of the Indian Scenario, where accountability and transparency are among the major issues. As an example, over 60% of projects are delayed or delivered in an incomplete in a way that makes it difficult for home buyers to get into completed homes.
In addition, the majority of builders don’t seek needed approvals prior to launching the construction projects. This could be a source of frustration and even annoyance for buyers who are confronted with these issues.
Furthermore, builders do not pay for delayed projects and they are also reluctant to be accountable for unfinished or insufficient or defective constructions.
Some Attempts at Reform
Therefore, any effort to reform must first take care of the structural problems, and that is the reason we discussed RERA. RERA as a well-meaning law. For instance, as per the rules of this law, builders must take full responsibility for handing over complete homes and are not able to abscond with the consequences.
Additionally to that, the RERA defines the remedies available to buyers who wish to contact the authority that is statutory or the RERA regulator, who is expected to offer relief and assistance for homebuyers who have been harmed by the purchase there are issues with the product or other aspects.
Additionally further, the RERA also tackles the recurring issue of financing homeowners, where prospective buyers receive honest and transparent funds by way of loans from well-known and trusted lenders.
In essence, what RERA intends to achieve is to bring greater transparency and accountability to the Indian Real Estate Sector.
Demand Supply Mismatch and Overcapacity and Shortage at the Same Time
However, there are a variety of other issues on the supply and demand aspect in the process. For example, many major Metros in India typically suffer from an oversupply of capacity, where there are lots of houses for sale but not enough buyers, mostly due to these homes being used as a way to hold money for builders.
Also, despite various measures, the government has failed to stop the urge to build homes without considering the demand and then utilize the surplus funds and the liquidity within the system to profit by builders who make use of the funds to construct mega projects. Some of these end up being White Elephants that are built for the sake of building, but with no homes actually used.
However real home buyers in these cities often discover that there is a deficiency of homes within their budget and this is because the majority of houses are priced too high or located too far from downtown of the city for them to buy.
Therefore it is evident that it is evident that the Indian Real Estate Sector is down and out of sorts because of a ineffective management and misalignment of supply and demand equations which tend to distort the supply and hence the shortage to the point that the issues are too numerous to be dealt with in a meaningful manner.
Although Demonetization as well as the RERA were meant to regulate the sector and bring discipline, the most important thing in this case is the fact that government must have stepped up and dealt with the issues previously mentioned.
In particular, it could have addressed the possible Hot Potato of Benami ownership which was identified as being a significant problem, and also extremely difficult to solve. In fact, there were high expectations following the Demonetization and the enactment of RERA that these issues were also addressed however, the reality was different.
Needed Reforms
What the debate thus far has shown is that fundamental reforms must be made to transform an effort to transform the Real Estate Sector in India into a fully developed economy and introduce world-class standards. This is only possible if there is a sufficient political will and the courage to take non-popular but highly effective actions like those suggested in this discussion.
In fact, if the government could carry out a Demonetization type of exercise in the Real Estate Sector as well this would certainly be a revolutionary and revolutionary move that could tackle a lot of the problems that the industry is facing.
The main point is that a variety of methods are available to produce real estate indexes. The decision is based on the quality and availability of the data. It is evident in this report that the real estate indexes perform very differently to other indexes.