Evolution of Real Estate Sector Post Independence

• @kw
• 08 May 2020

India has a rich heritage in the field of construction but many of the structures were destroyed by invaders specially after the loot and destruction by the Britishers, Arab and Afghans. In the midst of this the real estate sector suffered the most as many people became homeless during the partition and recovery took a long period to overcome from the wound. The 73 years of post independence period, the growth of real estate sector in India has been gradual. Cities have expanded and with growth in population and industries the real estate sector grew simultaneously. Cities expanded in planned manner, new technologies adopted giving rise to fast growth of real estate sector. The partition of India and Pakistan, Lahore became a part of Pakistan which was one of the prolific cities of India creating a void for Punjab, India. Hence, the period between the year 1950 and 1960 is considered as the period for new capital cities such as Chandigarh, Gandhinagar. Chandigarh was one of the first planned city developed in post- independence India. Chandigarh, the dream city of India\'s first Prime Minister, Jawahar Lal Nehru, was planned by the famous French architect Le Corbusier. Picturesquely located at the foothills of Shivalika, it is known as one of the best experiments in urban planning and modern architecture in the twentieth century in India.

In the decade following it, The Maharashtra Regional and Town Planning Act was passed in 1966. It was for the first time an Indian state passed such a real estate law. It gave a major boost for the governments of other states to design such laws. Considering housing as the basic necessity, Government gave major impetus to real estate housing sector, though remained in unorganized sector for a long time. To boost the residential industry, the central government established institutions like the Housing and Urban Development Company in 1970, City & Industrial Development Corporation in 1971 and the National Housing Bank in 1988.

Liberalization of monetary policies in 1990 was the most significant phase for reforms in real Estate sector. This allowed large number of multinational companies to enter India. Their entry generated huge demand for housing complexes and commercial spaces. This led an increase demand for skyscrapers. All big cities like Mumbai, Delhi, Kolkata, Chennai etc. large numbers of skyscrapers started coming up with high technological input from architects across the globe. 

1990 was perhaps the most critical time for India since the independence. Large and growing fiscal imbalances coupled with difficult monetary policies, created a serious looming economic crisis in the nation. However, the then government managed to liberalize the monetary policies. This opened up the avenue for the multi- national companies to enter India, which ultimately led to an increase in the skyscrapers. NRI’s investment and foreign capital in the early 1990’s led to immense growth in the real estate sector, with cities experiencing exponential growth. 

Real Estate sector got a further boost with influx of IT Companies in cities such as Bangaluru and Hyderabad and subsequently IT Industry spread to other parts of the country such as Kolkata where entire area –sector 5 in salt lake was dedicated for IT Companies, Gurugram, Noida, Vasi in Mumbai, Pune, Chennai and many more. The impact of IT and ITES development in India had a major impact since the time of Y2K bug, through which India left its imprint on the entire world.

Funding for real Estate projects were made easier by allowing Foreign Direct Investment in 2005 made it possible for the entry of foreign developers. The mall concept in India was started by Spencer Plaza in Chennai started in 2000 and followed by Ansal Plaza in Delhi.

Year 2006 saw the Indian government sanctioning modernization of its Brownfield airport, such as Mumbai, New Delhi along with Greenfield airports like Bengaluru via the public- private partnership model. This led to high increase in the real estate development around the airports.

Real Estate Investment trust (REIT) was introduced in 2014 to support investors with limited budget. Real Estate Regulation Act (RERA Act) came into force in 2017.  This act has brought a transformation and empowerment to the home buyers as well. 

Government announced Pradhan Mantri Awas Yojna to provide basis accommodation to every Indian by 2022. Through Union Budget 2019, the Government has announced additional deduction up to Rs. 1.5 lakhs for interest paid on loans borrowed up to 31st March, 2020 for purchase of house valued up to Rs. 45 lakhs. With rapid urbanization, comes a greater need for the housing. So, the real estate sector in India has very huge scope in future. The present situation caused due to COVID-19 will have some adverse effect in the growth of Real Estate Sector but recovery shall bring all progresses in line with government plans.