The Indian real estate sector is on the cusp of change as policy reforms by the government have resulted in new capacity building and opened new opportunity sectors.  The implementation of these reforms has resulted in greater transparency, thereby ushering in newer funding formats as well as leading to the emergence of “newer” asset classes for these funding avenues.

 

Not only has the sector witnessed high levels of investment activity in office, residential and retail sectors, there has been an active interest in the warehousing sector as well. In terms of sources of finance, there has been a gradual shift from debt as a dominant source of funding to equity financing. The focus of equity investments is no longer only on returns/IRR, but the quality of the asset is now an overriding theme.

The flagship initiatives of the government such as RERA, GST and REIT regulations have also started to reap results - More than 51 lakh houses have been sanctioned under PMAY ( urban) with investments to the tune of 2.82 lakh crores. Under RERA, more than 22,000 project registrations have been witnessed in close to a year. Also, the amendments to the REIT regulations will finally yield result as a REIT listing is likely in the coming months.

The real estate sector is not only abuzz with activity from a regulatory perspective, technology and innovation are playing an active role in shaping the sector’s future. Trends such as smart buildings, artificial intelligence and big data have come into focus faster than anticipated and will play a greater role in optimizing and monitoring portfolios of occupiers and developers alike.

While the operating environment for RE in India is undergoing a metamorphosis, skilling for the sector is an aspect that demands attention as more than 80% of the building and construction workforce in the country is minimally-skilled. Factors such as limited institutes for specialized training, lower enrollment ratio for higher education, migratory nature of labour and disparity in wages are some of the key reasons why skilling for the sector remains a concern. Efforts such as adequate government support, providing training facilities, incentivizing the employment of skilled workforce and ensuring wage parity can go a long way in providing a workforce that is prepared for the sector’s future.