Will REITs provide the much-needed boost to real estate in India? | Competitive Intelligence Bytes – Apr 2017

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Globally, the real estate investment trust (REIT) market has been a popular vehicle for investment. According to EY, global market capitalisation of REITs stood at approximately USD1.7t. Since 2010, the US REIT market has grown by almost 150%, while the market cap of non-US REITs has more than doubled in USD terms.

 

Until recently, ‘real estate’ was a dirty word in India, ridden with corruption, unaccounted cash, and delays in construction deadlines. Soon, the introduction of REITs in the country will become a reality, providing a safe investment option for investors – both institutional and retail. Retail investors, in particular, will get an opportunity to participate in India’s growth story, without the hassles that are synonymous with buying physical real estate.

 

To quote from a UN-Habitat report, urbanization and growth go hand in hand, and urbanization is essential for socioeconomic transformation, wealth generation, prosperity and development. India, no doubt, is urbanising at a rapid rate. The country’s urban housing shortage, currently pegged at 19 million, is projected to be north of 40 million by 2022. Is the government prepared?

Do have a look at our infographic on the “Housing for all by 2022” scheme – and what it means for building material companies.
Infographic
Housing for all by 2022

 

In June 2015, India’s central government launched the ambitious “Housing for All by 2022” scheme. Targeted at over 300 cities, the scheme will aim to build about 20 million houses by the end of 2022.

 

Subsidies will be provided for construction, making ‘affordable housing’ a business-friendly proposition. This is expected to see participation of private sector builders and developers, and consequently prove to be an additional business opportunity for all building material companies.

 

However, will the Modi-led government achieve this mammoth target? The ambitious target of 20 million homes by the year 2022 translates to constructing a little over 9,100 houses each day or about 380 houses each hour.

 

Housing for all by 2022 scheme – in terms of business opportunities, what does this mean for building material companies?

 

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