Is Real Estate Helping Build Urban Infrastructure?
As Anthony Trollope, the English Novelist puts it, “It is a comfortable feeling to know that you stand on your own ground. Land is about the only thing that can't fly away.”
Real Estate plays a very critical role in Urban Infrastructure. Real estate defines the city architecture, city's culture and its behaviour. Real estate and the urban infrastructure should go together. Historically, urban infrastructure and real estate were always one phenomenon. This is even applicable to some of the latest smart cities like Barcelona, Shanghai, Singapore and even our own Chandigarh. Urban infrastructure needs to be built in a way that it complements the nature and needs of the people, which in turn will determine the development of real estate in the city.
The most important aspect of this convergence is inclusive development. It is just not the infrastructure development, there needs to be employment generation for its long-term sustainability. Infrastructure growth offers short term employment opportunities and unless we create long-term employment opportunities, this will lead to speculation or such cities would fail. There are several factors that come into the fore while we define the role real estate plays in shaping urban infrastructure.
Let us take the example of Hyderabad and Ahmedabad. According to me, the land and real estate prices will always be fair to the end users and will never sky rocket. It is because of the good infrastructure created by these states in the last ten years. The focus on infrastructure by these two states have not only kept the real estate prices in control, but also helped consumers to have a better quality of life.
Increasing importance of technology
In our country, so far, the technology is catching up very slowly. This needs to change. Our Prime Minister has a great vision of Housing for All by 2022, and if this dream is to become a reality, new technology is the only solution. We should also focus on making green buildings as this is the future.
Options to tackle the burgeoning housing challenge in India
I would divide this into two parts. One is affordable housing and the other is Housing for All. What is most important for our country now is Housing for All. Only this will uplift our society. For us to make this Housing for All to come true, we need affordable long-term capital. It can be thru FDI or ECB or even long term bonds. We need to look at various options of making cheaper funds available for this sector.
After seventy years of independence, still the housing shortage is about 20 million homes. If we need to address the housing shortage, the government needs to take a serious view on this and accordingly define the laws. It will be better if we have single window clearance, but at least we should have clearly defined laws for the real estate projects.
Impact of RERA and GST
RERA will bring down the number of players in the industry on one side and on the other side will have few good quality players. RERA will discipline the industry. But for RERA and the industry to be successful, there needs to be some correction on the current RERA bill. GST will also help real estate growth in long term, but in short term, the cost is likely to go up marginally.
Apart from this, we also need to factor in the volatility in the Indian economy considering recent measures taken by the government like demonetisation and the spiralling effect it has on the real estate sector. In my opinion demonetisation is our PM Modi's revolutionary, bold and courageous step, thus fulfilling his commitment to unearth and weed out black money in the system, which will have significant long term benefits for the economy.
When it comes to real estate, less organized segment will only be affected. The organized real estate sector welcomes Prime Minister's present step as it will further improve sector's position on transparency and corruption in the global minds thus enabling further capital flow. However, with this check on black money, we can expect fall in land prices and increased bonafide demand for housing particularly affordable housing.
Finally, our prime minister's vision of Make in India can bring solution to a major level. We may have to focus on industrial and agricultural development for our long-term sustainability. While creating the city design, we need to keep these two factors in mind.