The Indian real estate and construction sectors continue to lure international as well as domestic investors. In coming years, residential as well as commercial segments of the real estate market in India are poised for growth. This is supported by the fact that the amount of investments within these sectors has seen an increase in the past six months. And government’s plan to build 100 smart cities, develop infrastructure in and around the existing cities has made the market a sought after investment destination.
In addition to this, government’s recent announcement in the Union Budget 2014-15 has boosted the investment sentiment in the country. The announcements such as the allocation of funds for boosting rural housing and infrastructure, introduction of real estate investment trusts (REITs) and various other steps to promote affordable housing in the country has created a favourable market place for further growth. REITs specifically will prove to be an effective tool for enhancing investments into the commercial real estate.
However, there are some concerns from the viewpoint of homebuyers. High retail inflation and rising commodity prices continues to be a concern for all. This has burdened the end-users resulting in a drop in sales across cities. But there is a silver lining in all this gloom. If one believes the recent news, there has been a marginal price correction in the Indian property market. The International Monetary Fund recently launched data series on global housing prices. As per news reports, the data suggest that in India, home prices fell the most in the 52 nations list. The drop recorded was in single digits. The National Housing Bank Index (Residex) which tracks the price movement in the country corroborates the trend to some extent. The Residex showed that that of the 26 cities it tracks currently, 13 registered marginal price declines during the period January and March 2014. Real estate prices in several Indian metros have crossed sustainable limits during the period 2002 to 2008.
As a result, buyers will have an opportunity to buy at lower rates. According to an industry estimates, in certain key markets, the average prices of units in new launches have decreased by 15-25 per cent with respect to prevailing market pricing, and developers are trying to lure buyers with unprecedented festive offers. The trend will be even more visible as we progress into coming months.
Need for more professionalism
To generate further growth and make the market more proficient, it is imperative that market place speaks the language of investors and adopt international best practices. While the industry is getting more organized, it needs more regulation and more professionals. While the government is discussing reforms such as real estate regulation for the sector and single window clearance for project approvals, skills development has lagged. According to RICS Research Report ‘Real Estate and Construction Professionals in India by 2020, India has nearly 50 million people working in built environment, of which only 2 million are professionally qualified, while the remaining are primarily construction workers. To deliver all the potentially required real estate space and planned infrastructure, India will need nearly 4.5 million ‘core’ built environment professionals over the next decade. However, given the miniscule supply of built environment professionals today; the current demand-supply gap ranges between 82-86%. The built environment will have the requirement of 5 million skilled candidates every year till 2020.
RICS and its efforts
While RICS has been involved in galvanizing efforts to bring regulation and single window clearance mechanism, it is equally working in the way to bring industry ready professionals in the country. Set up in 1868, Royal Institution of Chartered Surveyors (RICS) is one of the world’s leading self regulatory professional bodies for qualifications and standards in land, property and construction. It has over 180,000 members across 146 countries practicing in 17 specializations. An independent organization, RICS is headquartered in London and governed by a Royal Charter, which requires it to work in public interest.
RICS launched in India in December 2008 with an objective to work towards elevating the standard of professional performance in the Indian real estate industry and to bring in international standards and best practices. As an organization our key roles are providing professional qualification, bringing regulation, bringing knowledge and best practice standards, and impart education and training. RICS also does actively participate in public affairs by advising governments and NGOs on legislation and other public policy issues. Through its research and economic analysis, it presents a neutral view within the market.
Citing the dearth of skilled professionals within real estate, construction and infrastructure sectors, RICS has set up the RICS School of Built Environment, Amity University in Noida. The School - an industry led academic institution – has been set up after a strong call from the industry and is supported by leading firms as well as the Ministry of Urban Development, Government of India. Providing graduate and under-graduate course across built environment sector, the School aims to produce professionals that are ready to change the sector by bringing in more professionalism.
Going ahead, RICS plans to build many more such institutions of learning and skills development. While RICS would continue to advise the government on the effective implementation of various reforms measures as envisaged, it would continue to work towards bringing professionalism into the sector.