The Center, states and cities, lawmakers, financial and city regulators have all focused their attention on Indian cities and how to make them self-sufficient. This is also the basis for the success of the real estate industry.
2021 has probably been a defining year for the real estate sector, both from a consumer and an industry perspective. End-users returned to seek completed, habitable apartments, outlying locations lost their stigma, and demand shifted to larger housing units. For the industry, the rapid sale of completed homes has been a relief, speed of construction has become a priority, and smaller project phases, in step with consumer demand, have become the norm. Policymakers responded to the crisis and the resulting housing needs with lower mortgage interest rates, a time-limited suspension of stamp duties and registration fees, and focused on micro-level health infrastructure to deal with the pandemic.
But in my opinion, the biggest achievement of the year was the recognition of what the city’s management systems are suffering from and the efforts to give them enough money to handle their immediate needs. Using incentives such as milestones to be able to borrow to meet their needs was a forward-looking move.
Some valuable documents have analyzed the real estate industry in the context of city development and town planning. The first was a definitive analysis by Niti Aayog in September on the urban planners shortage and why it would have a huge impact on India. A country that touts urban reforms and has the declared intention of creating 100 smart cities, cannot and must not lack urban planners. The report is particularly important in the context of India’s race to urbanize 50% from the current level of less than 30%. About 65% of urbanization takes place in census towns, without even basic master plans.
As cities become urbanized, land values keep increasing. The second report I am referring to here is the CAG report on what went wrong in the planning and execution of the city of Noida. When urban land becomes very valuable, there is often a risk that unscrupulous officials will take advantage of the system and defraud the city. In Noida, the CAG report highlighted how multiple checks and balances are needed to prevent large-scale fraud. Not only has the city lost revenue, but thousands of end users are struggling to get homes they have paid for over the past decade.
A third report which I believe to be very critical is the State Finance Report of the Reserve Bank of India, where he analyzed the lack of funding at the city level and how money was produced so that states could cope with the Covid-19 pandemic. If enough money has been collected to manage the immediate crisis, it is also important to make the city autonomous so that the Center and the States do not always have to support the cities. Moreover, when huge sums were borrowed during the pandemic, the system must also be made capable of raising enough money to pay off the financial system. Innovation in municipal finance must be the order of the day, with rigid checks and balances to ensure that fraud does not take place.
The pandemic has shifted the focus to lifestyle amenities such as parks, open spaces, livability, and access to personal and public space. The outskirts of cities where prices are low and therefore larger housing units available, have become in demand. Shrikant Shitole, President of Credai -MCHI, Kalyan Dombivali Unit and Managing Director of Tycoon Group, said: “The development of infrastructure is the most fundamental element in defining and raising the potential of localities. Over time, Kalyan, Dombivali and Navi Mumbai have evolved with improved connectivity, and upcoming major infrastructure projects promise to further improve its accessibility, making these areas one of the most preferred places to reside.
“Mid-sized municipalities with a wider range of project configurations, especially BHK 1 and 2, attract more demand in the market,” he noted. Consumer confidence has also increased due to the Real Estate Regulation and Development Act 2016 (RERA) which ultimately resolved some of its problems through interpretations of the law at the High Court and the Supreme Court. Today, the RERA registration has become a safety mark for consumers that the money raised for the project would be spent on it and not misused elsewhere.
Overall, the year was a turning point for the industry. As the pandemic persists, the economic management of cities may hold the key to how the future unfolds.
The opinions expressed above are those of the author.
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