Connect with us

Guest Column

NDA’s Win to Double Institutional Investments in Real Estate to US$ 10 bn in 2019


Ramesh Nair,
CEO & Country Head, JLL India

Mumbai, May 23, 2019: People of the world’s largest democracy have given their mandate to the Government for another term. After half a decade, we now have a glimpse of a ‘New India’ that the Government envisioned for us when it came to power in 2014. While we witnessed the implementation of key reforms during the first NDA regime, strengthening of the overall economy is what is expected with the continuance of those reforms. Looking back, we realize that the two words that perhaps rightly sum up the contribution of the government are continuity and stability.

These measures would directly impact the real estate market. Segments including residential, office and retail have emerged stronger as a result of the developments so far. Due to renewed focus on globalization and industrialization, emerging sectors like warehousing has come up strongly.

The growth story until now

The Government introduced the Real Estate (Regulation and Development) Act (RERA), a landmark reform in 2016. It also introduced the much-needed Goods and Services Tax (GST) in 2017. Collectively, these reforms have had a significant impact on the real estate sector.

These have managed to bring in the much-needed efficiency and transparency in the system, albeit the industry witnessed teething issues during the initial phases of their implementation.

For the residential segment, RERA has played a level-playing field among homebuyers and the developers. Consequently, India’s residential sector saw rejuvenation after an initial challenging phase. With regulation reinstating homebuyers’ confidence in the segment, markets witnessed robust recovery in sales in 2018. While sales went up by 42% vis-à-vis the sales in 2017 new launches grew by 53% during the period, reflecting optimism and commitment of developers catering to the segment. Further in the January-March quarter of 2019, sales grew by 28% as compared to the corresponding quarter in 2018.


The buzz around affordable housing has gained much momentum and has received utmost focus with the aim of ‘Housing for all’ by 2022. The Pradhan Mantra Awas Yojana (Urban) allocated Rs 4.6 lakh crore during the last five years resulting in the construction of 1.8 mn homes. As per JLL Home Purchase affordability Index (HPAI) study, home affordability increased significantly in the last five years on the back of rising incomes and stable real estate prices.

Sales are likely to receive a further push with progressive policies of the government. During the first quarter this year, the government further lowered GST rates on affordable homes to 1% from the earlier 8%, without input tax credit (ITC). The GST on projects under construction, which are not under the affordable housing segment, was reduced to 5% from 12%. The rate revision augurs well for homebuyers as the process of claiming the ITC under the former system was complex.

While the government’s positive measures have helped in recovery of residential segment, the steps have also put India office and retail segments, and emerging segments such as logistics and warehousing on a global map.

Reforms linked to the ease of banking and e-commerce, digitisation, and other related initiatives by the Government over the last five years have contributed to the growth of retail and office markets. The progressive modification of REIT (Real Estate Investment Trust) regulations in the country and their subsequent implementation has rekindled the interest of several institutional players into the India market.

India’s office market that has 541 mn sq ft of Grade A stock has seen a robust annual net absorption of 30 mn sq ft over the last four years (2014-2018). In 2018, the office absorption exceeded 33-mn sq ft, with an expectation for strong absorption during 2019, at 38-mn sq ft. With commercial office space emerging as the most favoured investment avenue for institutional investors, capital flows have increased from US$ 1.6 bn (2009-13) to US$ 8.2 bn (2014-18). Constructive REIT reforms since 2014 led to the successful listing of Blackstone-Embassy REIT in India. JLL has estimated that Indian office space holds a potential REIT able space of 294 mn sq ft. We expect more REIT launches in 2019. For institutional players, newer business around Co-living, Flex-spaces and PropTech are opening up, giving much hope and confidence in the India growth story.


On the back of structural reforms such as granting of infrastructure status and GST implementation, the Indian warehousing and logistics sector is set to touch a stock of 344 mn sq ft by 2022, more than double the current capacity of 169 mn sq ft. The segment would attract nearly US$ 10 bn investments over the next 4-5 years.

The NDA Government’s efforts to improve the ‘Ease of Doing Business’ is evident from the

World Bank Doing Business Report (2019) rankings published in the last quarter of 2018, where India ranked 77th among 190 countries assessed on the Index. This has been a significant improvement from the previous performance.

The impact of reforms has been reflected in the number of investments received by the real estate sector. Of the total institutional investments of US$ 30 bn during 2009-2018, US$ 20 bn was invested in 2014-2018. During the same period, the share of foreign investments more than doubled to 70% in 2018 from 31% in 2009. We are confident that institutional investments in 2019 will nearly double to US$ 10 bn as compared to 2018.

Real estate sector has now high hopes from the new Government that has come to power with thumping victory. We expect the Government to uniformly implement RERA regulations across the states to improve buyers’ confidence. It should also create a single window clearance mechanism at the National level for easy approvals. Government should also work to release the public land holding for the creation of additional affordable and mid-income housing. The need of the hour is also to significantly lower interest rates, thereby, improving affordability, liquidity and boosting housing demand.


On the back of robust policy measures implemented over the last five years, we expect the growth momentum in the real estate sector to continue. The continuity of reforms for the next five years is sure to auger well for the economy and real estate sector.