Real estate is a fundamental component of development which not only shapes the form but the future of any place. It is significantly an indispensable aspect of the urban development which outlines and determines nature of development, economy, functioning, amenity, welfare, resilience and sustainability of any urban area. Real estate property encompasses the land and structures affixed to it that contribute to its overall value. This sector has been left rudderless in many ways in whole of urban India as are sult most of the urban centers irretrievably have been impacted, sacrificing quality of urban life and sustainability. Poor regulations, controls and enforcement for various real estate activities have dominated the sector, making urban population vulnerable to operations of urban speculators, unorganized developers/builders and individuals, who by their profound sagacity, self-driven motives and hulking economic returns have battered this pivotal sector for their immediate benefits, overlooking the longterm city development and ecological safeties .In the whole process urban local bodies ,Development Authorities and Agencies responsible for provision of housing have acted as facilitators and complemented overtlyin worsening the conditions of cities and towns. Poor and halfhearted planning, lack of initiatives and ignoring the vital duties of planning and development of the cities by development authorities have played in the hands of the illegal operators who muddled and messed of city development, economy, housing, plans, services, and ecology in almost all the urban areas. Urban Municipal Bodies have accentuated the complications by permitting and promoting the unorganized sprawl and growth ofcities /towns in bargain to yield building permission fees as revenue, without appreciating the nitty- gritties of city planning beyond realms of prospective plans and underscore its insinuations on city in the long run. The process of development beyond the organized real estate activities has permeated spontaneity in urban growth with multidimensional disconcerting consequences andknock-on effects.
Real Estate Sector India
Despite this,India's real estate sector has shown resilience and growth potential in recent years, with the sector expected to become a trillion-dollar market by 2030. The Indian real estate industry is one of the largest sectors after agriculture and primary sector, contributing about 6.5% to 7.5% to India's GDP. It has been a major source of jobs for the unorganized sector of the Indian labor market and has been a beneficiary of post-liberalization periods, where India became a hot property for foreign direct investment. Since the 1990s, the real estate sector has shown significant growth, with metro cities experiencing a boom in the reality sector. The sector is also investing in technology and sustainability principles, with smart homes and data-driven insights guiding decision-making processes. Major cities are driving demand in both residential and commercial segments. The real estate sector has a significant impact on macroeconomic growth, with fluctuations in the real estate market impacting economic growth depending on the relationship between real estate and consumer markets. Sustainability has become a focal point, influencing construction practices and designs with a focus on energy efficiency. This dual commitment to technology and sustainability aligns the sector with global standards and fosters innovation. However, the real estate sector in India is not able to balance the supply demand continuum, as the demand for housing has been increasing exponentially from the last one decade. Despite government efforts through various schemes, it has not been able to cope up with the increasing demands.
The real estate sector in India contributes 6.3% to the country's GDP and is expected to generate 7.6 million jobs by 2025. It has shown growth in retail, hospitality, and commercial subsectors, meeting increasing infrastructural needs. Over the past three years, the sector has attracted investments of over $1.14 billion. However, it faces challenges such as high debt due to increasing construction and labor costs, as well as hardening interest rates. The housing sector contributes around 5% to the nation's GDP and is expected to rise by an additional 2-3% in the next few years. Real Estate Investment Trusts (REITs) have emerged as new investment vehicles, offering common shares to the public.Government initiatives, such as the Real Estate Regulation and Development Bill, aim to increase transparency and protect customer interests. While global concerns and economic uncertainty affect the market, the retail real estate market in India appears promising. Government regulations have a significant impact on real estate investment opportunities, with certain sectors and financial instruments being restricted. Foreign Direct Investment(FDI)regulations allow100% FDI in developing townships, infrastructure, and construction projects.
India's growth rate is expected to slow, leading to a market correction and oversupply situation in sectors like commercial and retail. However, the residential sector experiences stable demand for affordable housing. The hospitality sector is currently undersupplied but in recovery. The real estate sector in India comprises housing, retail, hospitality, and commercial sub-sectors. It is the second highest employment generator and expected to attract more investments from non-resident Indians.The Indian government aims to build 20 million affordable houses in urban areas by 2022 under the Pradhan MantriAwasYojana (PMAY) scheme. This will drive significant growth in the residential sector and increase demand for commercial and retail office space. The government's focus on affordable housing will drive growth in the residential sector, leading to increased demand for commercial and retail space.The Indian real estate market has experienced significant growth, with record-high housing sales in the first nine months of 2023. Experts believe that urbanization, rental market growth, and steady price appreciation are the main factors contributing to this boom. The sector is expected to grow at a rate of 9.2% from 2023 to 2028. Real estate investment trusts (REITs) are also gaining popularity.
The outlook for real estate investment in India is positive, with stable interest rates and expected economic growth providing momentum to the sector. Government policies, urbanization, and rising disposable incomes are expected to drive continued growth in the sector. The demand for homes, particularly in the affordable housing segment, and office spaces in major cities is expected to increase. Challenges such as land acquisition issues and regulatory complexities persist. However, with favorable market conditions, technological advancements, and a focus on sustainability, the sector offers promising opportunities for investors.
The Union Budget has had a significant impact on the real estate industry, particularly in meeting the demand for affordable housing. The Indian real estate sector is expected to expand significantly, reaching USD 5.8 trillion by 2047, contributing 15.5% to the total economic output. However, there is a housing shortage, especially in urban areas, and an additional 25 million units of affordable housing are needed by 2030 to accommodate the growing urban population.The implementation of the Real Estate Regulatory Authority (RERA) has improved transparency and attracted domestic and foreign investors. However, future challenges may arise as population growth flattens and the distribution of growth becomes more decentralized across cities. Government support is crucial in ensuring a seamless and sustainable growth path for the industry and its role in the Indian economy.
UN Agenda-2030
In view of United Nations' Agenda 2030 focusing on 17 Sustainable Development Goals (SDGs) and their related indicators, real estate sector is gaining attention due to its significant role in providing housing, land, and construction, fulfilling one of humanity's fundamental needs, and creating cultural value through architectural, environmental, or historical characteristics. Real estate markets are experiencing renewal due to recent crises, forcing a rethinking of approaches and business practices. The environmental impact of real estate goods accounts for about 30% of polluting emissions and 40% of energy consumption globally. The sector is estimated to provide 5 to 10% of employment and generate 5 to 15% of GDP in industrialized countries. Climate change and risks from extreme natural events also require adaptation to a noticeably different environment. Real estate investments focus on environmental and social sustainability, with the environmental dimension focusing on design and management choices of construction materials and energy efficiency and consumption reduction policies. The social dimension includes the quality of spaces, interaction with local communities, and adopting an approach oriented towards satisfying housing and land demands. As the world population is expected to grow by 60% by 2030, social considerations will be increasingly important in evaluating interventions on buildings. The demographic increase causes an increase in resource consumption and waste production, with land consumption ranging from agricultural use to urbanization. Economic inefficiency of unused assets is another problem, while reuse of existing assets can contribute significantly to environmental, economic, and social terms. Historical and landscape constraints, uncertainty in investment returns, occupant well-being, social equity in public-private partnership interventions, and relations with local communities and public administration in real estate investment processes are also important considerations.
Real Estate Scenario in J&K
Real estate sector in J&K has been operating quite differently than the rest of the country. In the erstwhile State due to the absence of strong industrial sector and lack of investment opportunities, people predominantly found investing in land safer and a productive venture. Mushrooming unregistered brokers, land speculators, developers and even the individuals ventured in real estate and in the absence of appropriate controls and enforcement,wherever these operated played havoc with city’s/towns future, using scarce and fragile land resource in untenable and indefensible manner.The real estate purchases were mostly for speculation and tapping the potential economic benefits in the sector.The operations were exceedingly for residential purposes and on everyoccasion the basic norms and regulation of development were floated, defeating the basic goal of every master plan. Collectively all the unregistered players and developers are primarily responsible for the pathetic development urban form of cities and towns of J&K with depressingly inadequate service, amenities and facilities. Unregistered players enjoyed the sector mainly because of the vacuum left by nonperformance of the Housing Board and the Development Authorities to augment and provide housing/housing sites to growing urban population, who under compulsionof having shelter have been constrained to procure land from open urban land market despite a lot of shortcomings. It is worth mentioning here since residential component constitutes more than 60 percent of total urban real estate, offered viable opportunities to harness the inherent economic benefit. It has resulted trade-off on many fronts, one the benefits attached to urban development were mugged by unregistered operators putting additional burden of extension of service to new expansions on agencies, secondly the emerging development has been nothing short of posh slumslacking most of the facilities and amenities and even the proper approaches. The operators were also at liberty and ruthlessly encroached the natural endowment areas wherever available. These included irrigation khuls, rivulets, riverbanks, wet lands, marshes, planation areas, hill slopes, low-lying areas na zool land, gass charia land, forest land and flood prone areas inflicting indelible damages to the water regime, land resources, plantation cover and to the urban sustainability. The revocation of Article 370 coupled with demonetization, digitization, tax deduction at source, regular updation of land valuation cost, scrutiny of developers/brokers/speculators and imposition of development charges has had a significant impact on the real estate sector in Jammu and Kashmir. This has meltdown the real estate deals despite this surprisingly real estate prices have skyrocketed over last few years in J&K. Urban poor and the lower middle income categories because of falling affordability are virtually out of real estate market which has/is adversely affecting their housing market. The central government has taken some steps to boost the real estate sector in Jammu and Kashmir. It was for this purpose for the first time a Real Estate Summit was held in J&K to strategize future urban/industrial growth trajectories. The government aims to make Jammu and Kashmir an attractive investment destination by implementing investor-friendly policies and enhancing transparency.The Jammu and Kashmir government is also taking measures to attract real estate players to the region. Initiatives such as digital processing of files, digitization of land records, and deemed approval for change of land use have been implemented. The government is offering incentives and a facilitator framework for developers, and there is ample land available for real estate development. Srinagar alone has 700 acres for residential development. Developers have the opportunity to tap into the high-value real estate market in the valley. The government has digitized property registration and aims to complete 3D mapping of all properties in Jammu and Srinagar within the next one-and-a-half years. Property prices have increased, reflecting the newfound investment opportunities in the region. However, concerns have been raised about potential demographic shifts and cultural changes, housing for urban poor and economically weaker sections due to harsh climatic severities. The central government is actively promoting real estate development in Jammu and Kashmir through collaborative efforts with organizations like NAREDCO. The government is implementing investor-friendly policies and aims to make the region an attractive investment destination. However, much success has not been met on this front till date.
Investment proposals worth Rs 81,122 crore have been received, while MoUs worth Rs 18,900 crore have been signed with builders. The development of new infrastructure, such as the All India Institute of Medical Sciences in Jammu, is expected to stimulate residential and commercial demand.The implementation of the Real Estate (Regulation and Development) Act (RERA) has played a crucial role in streamlining the real estate sector in India. RERA was extended to Jammu and Kashmir in October 2020, and the process of establishing the Real Estate Regulatory Authority (RERA) was initiated in February 2021.It was enacted to protect the interests of homebuyers and make real estate transactions more transparent and equitable. Ultimately, the opening of Jammu and Kashmir to real estate investments is a significant step towards its transformation. The government has also implemented other realty laws like the Model Tenancy Act and assured realtors that stamp duty will be reduced and a single-window system for project approval will be set up.Despite the positive developments in the real estate sector, there have been concerns about the potential acquisition of local people's land in the name of development. Additionally, the approval of seven new industrial estates and the introduction of development zones indicate a major push for industrial growth in the region.With the adaptation of central laws, buying a home in J&K has become easier for any citizen. The eligibility criteria have expanded, and key land laws have been amended or repealed to simplify the process. The real estate sector is supposed to thrive but has not shown any significant change especially in housing sector. With the easing of property purchase processes, J&K is expected to act as an attractive destination for investors and homebuyers.
Bottom Line
Real estate remains crucial as urban population increases, providing shelter for households, businesses, and industries. The various types of real estate have significant impacts on ecology, finances, and communities, directly affecting the quality of life and sustainability. Hence, real estate's importance lies in encouraging developers to prioritize environmental sensitivities and enabling responsible urban development to preserve their functionality for the future.
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