India faces a large housing shortage. It is estimated that by the year 2022, India needs to develop more than 9 crore houses requiring an investment of more than USD2 trillion at today’s cost or about USD260 billion annually, more than double the current level of investment. The investment in housing sector must grow at a CAGR of 18-20 per cent (including 6-7 per cent of inflation annually) till 2022 to achieve the vision of ‘Housing for all by 2022’. About USD1.5 trillion additional investments would be required to develop supporting urban infrastructure and commercial real estate to achieve sustainable growth.
Considering the fact that a real estate cycle (from conceptualization to hand-over stage) is about 7-8 years, the report highlights the need for reforms
in improving funding (both medium term and long term) for any visible action.
Strong reforms targeting higher flow from lending institutions (banks and
NBFCs), households' and private savings and foreign capital are the need of the hour which can be achieved by developing long-term financial instruments for the real estate sector, opening up external commercial borrowings, incentivizing housing investment, developing PPP mechanism, streamlining approval mechanism and reforming the Rent Control Act.
© 2016 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.